Industrial property rents continue to ease in H2

Factory, warehouse, and logistics properties saw a drop in average monthly gross rents for the period.

The industrial property remained soft in H2 2019 with average monthly gross rents of factories falling about 1.8% YoY to $1.67 per square foot (psf) per month (pm), according to data by Colliers. Meanwhile, warehouse and logistics rents eased by 1.6% YoY from $1.25 psf pm to $1.23 psf pm at the end of 2019.

Rents at business parks, in contrast, climbed by nearly 1.4% YoY to $4.37 psf pm at the end of 2019, from $4.31 psf pm at the end of 2018. Rents of independent high-spec space, on the other hand, increased by about 1.4% YOY to 2.94 psf pm over the same period.

Colliers’ senior director of industrial services Dominic Peters sights that factory rents would likely remain under pressure as the COVID-19 outbreak could hit manufacturers with disruption to the global supply chain as well as due to the ample new stock in factories.

Industrial rents for multi-user factories and single-user factories, on the other hand,would likely moderate amidst greater supply in 2020. Warehouse rents should remain soft in 2020-2021 amidst global trade uncertainties before recovering from 2022 as supply diminishes, read the report.

Meanwhile, location and supporting infrastructure could also be differentiating factors for specialised industries such as food factories and data centres.

In terms of vacancies, Colliers noted that the overall industrial vacancy rate could edge up in 2020 as net demand lags net supply.

Total net new supply of industrial space is expected to more than double YoY in 2020 to 20.2 million sqft, or about 4% of total stock, before coming off in 2021, according to data by JTC.

Vacancies should decrease from 2021 onwards as demand improves. Meanwhile, business park supply is set to intensify from 2023.