Rents for high-specification industrial spaces grew 2.1% to $2.9 psf in H1

Rents in these properties led to the sector's recovery.

For the first half of 2018, upper floor rents for independent high-specification industrial buildings located outside of science parks and business parks gained 2.1% HoH to $2.9 psf, Colliers International revealed. These led the growth of rents in Singapore’s industrial sectors.

According to a report, business park rents edged up by 1.2% HoH to $4.24 psf as tenants continued to gravitate towards newer business park buildings with better specifications which are able to command higher rents. Rents for factory spaces remained flat HoH at $1.88 psf.

Meanwhile, average gross rents of logistics properties slipped by 0.8% HoH to $1.25 psf due to the supply influx in 2017.

Also read: Industrial property prices slipped 2.1% in Q2

The net new supply of industrial space totalled 3.24 million sqft in H1 2018, taking into account the net withdrawal of 1.62 million sq ft (150,000 sqm) of single-user factory spaces in Q1 2018. The lag in demand resulted in a marginal decline in the occupancy rate of 0.2ppt HoH to 89.7% in H1 2018, Song noted.

Some of the major industrial supply came from properties like multiple-user factories like Mega@Woodlands (1.05 million sqft), Nordcom Two (749,000 sqft), and T-Space (737,000 sqft). Warehouses like PLG Building (592,000 sqft) and Poh Tiong Choon Logistics Hub (548,000 sqft) also contributed.

JTC had previously indicated that future new supply is set to ease from the record supply of 20.9 million sqft (1.9 million sqm, net lettable area) completed in 2017.

Incoming supply in the second half of 2018 will come from factories like Tuas Bay Drive (523,000 sqft) and JTC Poultry Processing Hub @ Buroh (431,000 sqft), as well as a warehouse at Tuas South Avenue 14 (685,000 sqft) and a business park Alice @ Mediapolis (425,000 sqft).

“The supply pipeline for warehouses and single-user factories is mainly in the West Region, while factory stock is concentrated in the West, North East and North Regions. With tapering supply coming on-stream from 2019 onwards, we expect average rents and prices to stabilise across all segments,” said Colliers International research director and head Tricia Song.

Leasing records picked up in H1 2018, possibly due to the abundance of new industrial space coming on-stream. JTC’s database revealed that Q2 2018 saw the highest number of leasing records on a quarterly basis at 2,775, reflecting a jump of 12.8% YoY. 

This brought total leasing records for H1 2018 to 5,193, an increase of 21% YOY and the highest level on a semi-annual basis, Song noted. “This is encouraging but vacancy still increased, suggesting demand still lags supply,” she added.