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

The development in industrial rate and rental indices was supported by manufacturing result growths in electronics as well as precision engineering, along with resilient necessity for semiconductors, notes Leonard Tay, head of study at Knight Frank Singapore.

He includes that increasing concerns connecting to food security and also accessibility to raw materials as well as necessities triggered considerable stockpiling task, which added to stronger demand for storage facilities. “The strengthening Singapore dollar supplied assistance to stockpiling, minimizing rise in prices as rising cost of living comes to be increasingly considerable,” he remarks.

Therefore, the industrial property market is expected to benefit from the tight supply. “Preventing any kind of sharp downturn in the worldwide economy, demand for industrial space in 2022 is anticipated to be effective and occupancy needs to be reasonably stable,” Song includes.

However, He keeps in mind that long-lasting demand for industrial space will certainly still be driven by tailwinds such as Singapore’s enhancing concentrate on high-value production and biomedical sectors. Colliers is forecasting commercial leas to grow in between 2% to 4% this year, while industrial costs are anticipated to increase between 5% to 7%.

For factories, multiple-user manufacturing facilities saw the greatest quarterly and annual growth in 2Q2022 at 2.1% as well as 3.7% respectively. “This could be credited to the increasing demand for high-specification multi-user factories, as occupiers search for workplace quality commercial spaces near the city fringe,” marks Catherine He, head of research, Singapore at Colliers.

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Industrial leas expanded 1.5% q-o-q in 2Q2022, up from the 1% q-o-q growth reported the previous quarter, according to information launched by JTC on July 28. This notes the 7th succeeding quarter of development as well as the fastest quarterly growth since 3Q2013. On a y-o-y basis, rents expanded 3.4% at the time of the 2nd quarter.

Colliers’ He, on the other hand, highlights that new supply will come onstream at a standard overall of about 1.2 million sqm each year from nowadays till 2025, including 1.6 million sqm to be accomplished this year. This exceeds the 0.7 million sqm yearly average over the past three years, suggesting that supply is likely to catch up to request as well as solidify the rate of rental as well as rate buildup, she says.

Looking forward, Tricia Song, CBRE head of research, Singapore and Southeast Asia, notices that industrial pipe stays “exceptionally slim”, with multi-factory pipe anticipated to taper down from 2023 while most of storage facility supply up until 2023 is already completely pre-committed.

Warehouses charted the strongest efficiency among all the industrial sub-segments, signing up a rental boost of 2.1% q-o-q and 5.7% y-o-y respectively in 2Q2022. Throughout the quarter, storehouse tenancies boosted to 90.9%, up from 90.3% in 1Q2022.

Industrial costs also rose, growing 1.5% q-o-q in 2Q2022 but alleviating from the 3.1% q-o-q surge documented the previous quarter. Meanwhile, commercial occupancy rates inched up from 89.8% in 1Q2022 to 90% in 2Q2022.

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