JTC All Industrial Rental Index shows signs of recovery

The JTC All Industrial Rental Index continued its rebound in Q3 2021.

The overall occupancy rate for the industrial property market stood at 90.1%. Y-o-y, this is 0.5 percentage points, but unchanged q-o-q wise. 

Total available stock, on the other hand, saw an increase to 228,200 sqm in the quarter, compared to the 374,000 in 2Q 2021. 

Price and rental indices of all industrial space saw an increase by 0.1% and 0.7% q-o-q respectively.

As of September 2021, around 0.9 million sqm of new industrial space is expected to be completed by Q4 2021, with single-user factory space making up 45%. Multiple-user factory makes up 39%, while the remaining 16% is made up of warehouse and business park space. 

Tricia Song, Head of Research, Southeast Asia, CBRE, sees this as a sign that all bodes well for the overall industrial market. 

This follows the trade indicators that followed a similar trend, with the expansions in manufacturing output, NODX and PMI following suit as well. 

Meanwhile, warehouses had the highest rental increase at 1.7% q-o-q since its previous peak in Q4 2013. Occupancies for warehouses also saw a jump by 0.4 percentage points q-o-q to 90.1%.

Song says that this is in line with the research’s observations, as availability for prime logistics space has remained tight and demand for storage space has benefitted second-tier warehouses.

Rental index for multiple-user and single-user factory also increased by 0.3% and 0.6% q-o-q, respectively. CBRE expects this growth to continue on the back of growth in the manufacturing and wholesale trade sectors. 

Meanwhile, research by Colliers also points to the industrial property market’s role in recovery, especially when compared to other real estate sectors. An optimistic outlook is present in the face of warehouse rents, as they are the beneficiaries of structural e-commerce growth. 

This, according to Colliers, will be a long-term driver for logistics space, with warehouse rents expected to grow 1.8% in 2021. 

Business parks and high-specs cases are also expected to recover from around 0.5% to 0.8% in 2021. This is expected to be supported by the growth in the technology sector, increased R&D activities, and a recovery in business confidence. 

The same can be said for factories, says the group, due to the growth of the economy. Factory supply, however, is expected to remain abundant.