Industrial rents could fall up to 14%

Ample space options give tenants more choice.

While there were some initial signs of a possible stabilisation on the manufacturing front, the question remains whether this can be sustained, given the challenging business and economic environment.

Hence, Colliers International expects most industrialists to stay cost conscious, which will prompt landlords to remain flexible and proactive in meeting the real estate requirements of tenants.

"Given the tentative economic outlook, we expect industrial rents to remain soft over the next three to six months. Coupled with the ample space options available, there will be opportunities for industrialists to secure choice business premises at competitive rents," it said in a research note.

The research firm predicts that prime conventional industrial rents will ease further, albeit at a slower pace in Q4 2016. This, it said, will bring the full year rental decline for prime multi- user conventional industrial space to 7.0%-14.0% in 2016.

Meanwhile, with landlords facing stiff competition for qualified tenants, Colliers International expects rents at independent high-specification (high-specs) industrial buildings located outside the science and business parks could soften further in Q4 2016, bringing the full year decline to up to 9.0%.

The exception is the business park segment, where it projects a modest 1.0%-2.0% rental increase for full year 2016, on the back of limited new multi-user supply and the higher rents attainable at newer developments.

Prices of prime freehold conventional industrial spaces eased up to 0.5% in Q3 2016. We expect a full year decline of up to 3.0%, lagging the rental decline due to rarity of such assets and financial holding power of these owners.

As for the strata-titled industrial sales segment, the research firm expects the total number of caveats lodged to stay below the 2,000-level in 2016. "This takes into consideration the cautious and selective buying activity, as well as the traditionally slower moving year- end holiday and festive period," it explained.

The last time the number of sales caveats lodged breached the 2,000-mark was in 2013.