Singapore industrial leasing volume declines after seven consecutive quarters
Leasing volume declined 10.4% to 3,028 transactions in Q2.
Singapore’s industrial leasing transactions ended its positive streak as leasing volumes declined 10.4% YoY to 3,028 transactions in Q2 2022. Leasing transactions have been on seven consecutive quarters of increase since Q3/2020 according to Savills.
The analyst says the drop was mainly due to fewer tenancies signed for single- and multiple-user factory segments which fell by 7.1% and 14.0% YoY respectively in Q2. The warehouse space was the only segment which recorded higher leasing numbers, rising by 7.0% YoY in Q2 (+1.8% YoY in Q1. Rising demand from ecommerce and third-party logistics (3PL) firms was the likely cause for this increase.
Here’s more from Savills:
Correspondingly, the vacancy level for warehouse space eased to 9.1%, the lowest since Q4/2015. Although there was a net supply of nearly 1.2 million sq ft of new warehouse spaces in Q2, it was offset by a net demand of 1.8 million sq ft. It is likely to be due to healthy demand for modern logistics spaces, which helped to lift the take-up rate of new developments such as Logos Penjuru Logistics Centre. While vacancy level for multiple-user factory space fell by 0.6 of a percentage point (ppt) QoQ to 10.6% in Q2, that for single-user factory space remained flat at 9.7%.
Along with healthy demand for factory and warehouse spaces, especially those well located or modern facilities, rents continued to increase at a faster pace across all industrial segments in Q2/2022. The JTC’s rental index for multiple-user factory and warehouse spaces have retraced their levels since 2016 and 2017 respectively. Savills’ average monthly rent for prime multiple-user factories and warehouse and logistics properties increased by 5.2% QoQ to S$2.00 per sq ft and 1.4% QoQ to S$1.47 per sq ft in Q2.