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

For manufacturing facilities, multiple-user manufacturing facilities saw the greatest quarterly as well as annual growth in 2Q2022 at 2.1% and also 3.7% specifically. “This could be attributed to the expanding demand for high-specification multi-user warehouses, as occupiers look for office grade commercial rooms near the city fringe,” notes Catherine He, head of study, Singapore at Colliers.

The development in industrial value and also rental indices was sustained by manufacturing output developments in electronics as well as precision engineering, along with resilient necessity for semiconductors, notes Leonard Tay, head of research at Knight Frank Singapore.

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

Colliers’ He, on the other hand, highlights that all new supply will come onstream at an average overall of around 1.2 million sqm each year from nowadays up until 2025, consisting of 1.6 million sqm to be completed this year. This exceeds the 0.7 million sqm yearly standard over the past three years, indicating that supply is most likely to catch up to demand as well as toughen up the pace of rental and also cost buildup, she believes.

Industrial rentals expanded 1.5% q-o-q in 2Q2022, up from the 1% q-o-q development recorded the previous quarter, according to information released by JTC on July 28. This marks the 7th successive quarter of growth and also the fastest quarterly growth since 3Q2013. On a y-o-y basis, leas grew 3.4% at the time of the 2nd quarter.

Therefore, the commercial realty market is anticipated to benefit from the tight supply. “Barring any kind of sharp downturn in the worldwide economy, need for industrialized area in 2022 is expected to be strong as well as tenancy must be relatively secure,” Song adds.

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He adds that rising problems associating with food security and accessibility to resources and needs prompted substantial stockpiling activity, which contributed to more powerful need for warehouses. “The strengthening Singapore bill offered support to stockpiling, mitigating acceleration in costs as rising cost of living ends up being progressively considerable,” he says.

Industrial rates also rose, growing 1.5% q-o-q in 2Q2022 but reducing from the 3.1% q-o-q rise documented the previous quarter. At the same time, commercial occupancy costs inched up from 89.8% in 1Q2022 to 90% in 2Q2022.

Looking ahead, Tricia Song, CBRE head of study, Singapore and also Southeast Asia, notes that commercial pipeline continues to be “incredibly slim”, with multi-factory pipe expected to taper down from 2023 while the majority of stockroom supply up to 2023 is currently totally pre-committed.

Nonetheless, He notes that long-lasting need for industrial space will still be driven by tailwinds such as Singapore’s raising focus on high-value manufacturing as well as biomedical sectors. Colliers is predicting industrial leas to increase in between 2% to 4% this year, while industrial prices are expected to increase between 5% to 7%.

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