Industrial rents up 1.5% in 2Q2022, charting seventh consecutive quarter of growth

The development in industrial cost and also rental indices was supported by producing output developments in electronics and precision engineering, along with resilient need for semiconductors, mentions Leonard Tay, head of research at Knight Frank Singapore.

Looking ahead, Tricia Song, CBRE head of research, Singapore and also Southeast Asia, notes that commercial pipeline stays “exceptionally thin”, with multi-factory pipe anticipated to taper down from 2023 while most of warehouse supply up until 2023 is already totally pre-committed.

He adds that climbing worries associating with food stability and also accessibility to resources and necessities motivated substantial stockpiling activity, which added to stronger demand for warehouses. “The enhancing Singapore money provided support to stockpiling, reducing acceleration in expenses as rising cost of living becomes significantly substantial,” he mentions.

Colliers’ He, on the other hand, highlights that new supply will come onstream at an usual overall of around 1.2 million sqm every year from today till 2025, consisting of 1.6 million sqm to be accomplished this year. This surpasses the 0.7 million sqm annual average over the past 3 years, meaning that supply is likely to reach demand as well as toughen up the speed of rental as well as rate growth, she suggests.

Midtown Bay Singapore

Storage facilities charted the greatest performance among all the commercial sub-segments, registering a rental increase of 2.1% q-o-q as well as 5.7% y-o-y respectively in 2Q2022. Throughout the quarter, storehouse tenancies boosted to 90.9%, up from 90.3% in 1Q2022.

Industrial rents increased 1.5% q-o-q in 2Q2022, up from the 1% q-o-q growth recorded the previous quarter, according to data released by JTC on July 28. This marks the seventh consecutive quarter of development and the fastest quarterly growth since 3Q2013. On a y-o-y basis, rentals grew 3.4% during the second quarter.

For manufacturing facilities, multiple-user factories saw the highest possible quarterly and also annual development in 2Q2022 at 2.1% and 3.7% respectively. “This could be attributed to the increasing demand for high-specification multi-user factories, as inhabitants seek workplace quality commercial spaces near the city fringe,” notes Catherine He, head of study, Singapore at Colliers.

Therefore, the commercial real estate market is anticipated to take advantage of the tight supply. “Barring any kind of sharp downturn in the worldwide economy, demand for industrial place in 2022 is anticipated to be strong as well as occupancy needs to be fairly steady,” Song adds.

Nevertheless, He keeps in mind that long-lasting demand for commercial spot will still be driven by tailwinds such as Singapore’s raising concentrate on high-value production and biomedical fields. Colliers is forecasting commercial rents to expand between 2% to 4% this year, while industrial rates are projected to expand between 5% to 7%.

Industrial rates likewise rose, growing 1.5% q-o-q in 2Q2022 but reducing from the 3.1% q-o-q rise documented the previous quarter. Meanwhile, commercial occupancy prices inched up from 89.8% in 1Q2022 to 90% in 2Q2022.

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