Industrial spaces to bear the brunt of flailing manufacturing industry

Vacancy rate will spike to 11-12%.

Given the lacklustre manufacturing growth numbers of the city-state, the industrial sector is bound to be doomed as demands for industrial spaces continue to weaken.

According to DBS Research, the industrial sector is more than likely to be affected by the manufacturers struggling to maintain their market share with the intensifying competition.

Based on a recent report, the total manufacturing performance of the city-state for the month July dipped 3.6%. This is mainly due to falloffs in all of industrial clusters.

"[W]e project that demand for industrial space will remain weak as businesses close or consolidate, amid a surge in new supply completions," DBS said.

With this, sector vacancy is foretold to increase to 11-12% in the coming years.

"As such, net absorption is expected to remain negative at 395,000 square metres (sqm) to 776,000 sqm, resulting in vacancies spiking to in excess of 10% in 2016 to 2019,"the report expounded.

Industrial landlords would have to up their game and consider upgrading their properties to higher specifications in order to remain competitive and stand out.

"Industrial landlords are likely to turn on the defensive as they face the twin headwinds of both increased competition from new industrial space and business consolidations," DBS noted.