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

Industrial rents expanded 1.5% q-o-q in 2Q2022, up from the 1% q-o-q growth documented the previous quarter, according to data published by JTC on July 28. This marks 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 second quarter.

Looking ahead, Tricia Song, CBRE head of research, Singapore and Southeast Asia, notices that commercial pipeline remains “incredibly slim”, with multi-factory pipe expected to taper down from 2023 while most of storehouse supply up till 2023 is already completely pre-committed.

The growth in industrial cost and rental indices was sustained by making output expansions in electronics and also accuracy engineering, along with resistant demand for semiconductors, mentions Leonard Tay, head of research study at Knight Frank Singapore.

To that end, the commercial realty market is anticipated to take advantage of the tight supply. “Preventing any sharp slowdown in the international market, demand for industrial space in 2022 is expected to be robust and tenancy ought to be relatively steady,” Song includes.

For factories, multiple-user manufacturing facilities saw the highest quarterly and yearly growth in 2Q2022 at 2.1% as well as 3.7% specifically. “This could be attributed to the thriving interest for high-specification multi-user warehouses, as occupiers search for workplace quality commercial spaces near the city fringe,” marks Catherine He, head of research, Singapore at Colliers.

Industrial rates additionally rose, expanding 1.5% q-o-q in 2Q2022 yet relieving from the 3.1% q-o-q surge recorded the previous quarter. On the other hand, industrial occupancy rates inched up from 89.8% in 1Q2022 to 90% in 2Q2022.

Nonetheless, He notes that lasting need for commercial spot will certainly still be driven by tailwinds such as Singapore’s enhancing focus on high-value production as well as biomedical markets. Colliers is projecting industrial rents to develop between 2% to 4% this year, while industrial costs are predicted to grow in between 5% to 7%.

Colliers’ He, on the other hand, highlights that all new supply will come onstream at a regular total of about 1.2 million sqm every year from today up until 2025, consisting of 1.6 million sqm to be completed this year. This exceeds the 0.7 million sqm yearly average over the past three years, indicating that supply is likely to catch up to request and also toughen up the rate of rental and cost growth, she believes.

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Storehouses charted the best performance among all the commercial sub-segments, registering a rental boost of 2.1% q-o-q as well as 5.7% y-o-y specifically in 2Q2022. During the quarter, stockroom occupancies increased to 90.9%, up from 90.3% in 1Q2022.

He puts that rising issues connecting to food security and accessibility to basic materials and also needs triggered significant stockpiling activity, which contributed to stronger need for warehouses. “The enhancing Singapore money supplied assistance to stockpiling, alleviating acceleration in expenses as inflation comes to be increasingly considerable,” he says.

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