Fears escalate as rent inflation hits industrial and warehouse space with rents skyrocketing 5.4 per cent in the 6 months to March

And according to research from property firm Colliers, this is a rapid rise compared to a rent increase of just 1.6 % in the preceding year.

Colliers International’s latest bi-annual industrial property looked at capital and land values, as well as rents of three types of industrial properties namely, single-user factory premises, single-user warehouse premises and multi-user high-specifications (high-specs) industrial premises in 13 cities across 9 countries, from October 2010 – March 2011.

Capital and land values boosted to 10.7 per cent in Singapore. As of March 2011, capital values of single-user factory and warehouse space with a 30+30 year leasehold tenure averaged S$176 per sq ft and S$163 per sq ft, respectively, and the corresponding land values for these premises averaged S$103.86 per sq ft and S$70.83 per sq ft.

On another note, industrial rents are also growing, though a bit slower than capital and land values. From 2.2 per cent average growth, the rents increased to 2.8 per cent during the current review period.

Ms. Chia comments, “Investor’s optimism in the Singapore industrial property market was boosted by the continued rise in factory and warehouse rents of up to 5.4 per cent in the six-month period ending March 2011. This was up from the 1.6 per cent increase seen in the last review period. As of March 2011, monthly gross rents averaged S$1.44 per sq ft for single-use factory space and S$1.37 per sq ft for single-user warehouse space.

Consequently, rent for high-specs industrial space gained 11 per cent to average at S$3.13 per sq ft per month, up from the modest 1.4 per cent climb seen in the last six months. This made Singapore the top gainer for high-specs industrial rents among the submarkets surveyed during the current review period.”