Singapore business park rents slip by 0.1% in Q2

This is a significant slowdown from the 2.1% growth in Q1.

Business Park rents in Singapore have registered a marginal decline of 0.1% q-o-q in Q2 2024, a marked slowdown from the 2.1% growth in the previous quarter. 

“On the other hand, occupancy has risen by 20 bps to 78.3% this quarter. The higher vacancies could be attributed to the outlying and older business parks, whose weaker performance could weigh down on overall rents,” said Catherine He, Head of Research, Colliers Singapore.

Here’s more from Colliers:

Demand has been generally muted in the business park segment with only small requirements. Apart from right-sizing and the impact of flexible working, movements are driven by flight to quality as tenants prefer better located and newer offices. Some projects are also throwing in incentives such as fit-out capex and/or longer rent-free periods to attract tenants.

The business park segment is inundated with supply of almost 3.5 mil sq m set to come on stream from now till 2025. Notably, PDD will contribute over 2 mil sf of BP space to the market over two phases to be completed in 4Q 24 (1.3 mil sf) and 4Q 25 (0.74 mil sf). Out of this, two thirds of the space has been reportedly pre-leased to tenants from cyber security, AI, robotics, fintech, government linked entities and banks.

Demand at business parks could pick up in tandem with the anticipated economic recovery, as well as with newly completed projects in the later part of the year which will drive leasing activity. Moderate rental growth will be driven by the higher rents commanded at newer and better located projects.