Industrial space rents inched up 0.1% in Q4 2019

Easing of rents during the quarter was attributed to the large pool of stock in the west region.

Industrial rents inched up 0.1% in Q4 YoY, whilst rents remained unchanged QoQ, according to a report by JTC.

Rents of multiple-user factories inched down 0.1% in Q4 YoY, whilst warehouses similarly saw a decrease in rents by 0.2% in the same period. Single-user factory and business parks’ rents increased by 0.5% and 1.3% respectively.

The occupancy rate of the overall industrial property market fell 0.1% in Q4 YoY. Occupancy in multiple-user factories jumped by 1%, whilst business parks saw an increase of 1.3%. Single-user factories' occupancy decreased 0.1%, with warehouses’ occupancy also falling by 1.5%.

Industrial space prices slipped by 0.3% in Q4 YoY. Prices of multiple-user factories inched down 0.3%, whilst single-user factories’ prices edged up 0.3%.

CBRE’s head of research Desmond Sim noted that the easing of rents in Q4 may be attributed to the west region where a large pool of existing vacant stock remains.

Further, Colliers International’s director of industrial services Dominic Peters said that factory rents will continue to be muted as supply takes over demand in 2020.

“With new supply of factory space in 2020 remaining sizable at around 15.6 million sqft, which is equivalent to about 4% of current factory stock, we anticipate that overall factory rents will likely remain subdued as supply outstrips demand in 2020,” Peters noted.

Warehouse supply in particular, is set to increase to 3.6 million sqft in 2020, which is equivalent to about 3% of current warehouse stock, according to Peters.

“Given the challenging global trade outlook and the elevated vacancy rate of 12.0% at the end of 2019, we expect warehouse rents to remain soft, stabilising in 2020-2021 before recovering from 2022 as supply diminishes,” added Peters.