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

Warehouses charted the greatest performance among all the commercial sub-segments, registering a rental rise of 2.1% q-o-q and 5.7% y-o-y respectively in 2Q2022. During the quarter, storehouse occupancies increased to 90.9%, up from 90.3% in 1Q2022.

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

The development in industrial cost as well as rental indices was sustained by making result expansions in electronics and also precision engineering, in addition to resistant demand for semiconductors, mentions Leonard Tay, head of research at Knight Frank Singapore.

Looking ahead, Tricia Song, CBRE head of research, Singapore as well as Southeast Asia, notices that industrial pipeline stays “incredibly thin”, with multi-factory pipe expected to taper down from 2023 while most of storage facility supply up to 2023 is already totally pre-committed.

Colliers’ He, on the other hand, highlights that all new supply will come onstream at a standard overall of around 1.2 million sqm every year from now until 2025, consisting of 1.6 million sqm to be carried out this year. This outmatches the 0.7 million sqm annual standard over the past three years, meaning that supply is likely to reach demand as well as solidify the speed of rental and also cost growth, she believes.

He includes that increasing worries associating with food stability and also access to raw materials and also requirements triggered substantial stockpiling activity, which added to stronger demand for stockrooms. “The enhancing Singapore money provided assistance to stockpiling, mitigating escalation in rates as inflation comes to be increasingly substantial,” he remarks.

Industrial prices also rose, growing 1.5% q-o-q in 2Q2022 yet relieving from the 3.1% q-o-q surge noted the previous quarter. At the same time, industrial tenancy prices inched up from 89.8% in 1Q2022 to 90% in 2Q2022.

For manufacturing facilities, multiple-user factories saw the highest possible quarterly as well as annual growth in 2Q2022 at 2.1% and also 3.7% respectively. “This could be attributed to the growing demand for high-specification multi-user factories, as occupiers try to find workplace quality industrial spaces near the city edge,” marks Catherine He, head of research, Singapore at Colliers.

To that end, the commercial realty market is expected to benefit from the limited supply. “Disallowing any kind of sharp slowdown in the international economy, need for industrialized area in 2022 is expected to be strong and also tenancy needs to be reasonably stable,” Song adds.

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

Forett at Bukit Timah Qingjian Realty

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