Singapore prime business park rents up 0.7% to S$5.80 per sq ft in Q3

This is a result of improving occupancy levels.

The vacancy rate for business park spaces in Singapore’s Central Planning Region eased to 10.2% in Q3, thanks to a steady demand in the Mapletree Business City and one-north regions coupled with tight supply. 

According to Savills, as a result of improving occupancy levels, prospective tenants are accepting higher rents for these prime locations, driving Savills’ prime business park monthly rents up by 0.7% QoQ to S$5.80 per sq ft in Q3. 

Here’s more from Savills:

After registering a record high vacancy level of 18.7% in Q2 due to a dip in demand in Changi Business Park, vacancy in the East Planning Region remained almost unchanged at 18.6% in Q3. 

On the other hand, vacancy in the West Planning Region spiked from 25.1% in Q2 to 30.0% in Q3. Even though vacancy for International Business Park only saw a marginal increase of 0.2 of a ppt QoQ to 25.5%, the addition of new stock from the newly completed Cleantech Three put pressure on the overall occupancy in the West. 

Nonetheless, rents in the older business park clusters are starting to show signs of bottoming out, with Savills’ standard business park properties monthly rents recovering by 0.5% QoQ to S$3.99 per sq ft in Q3. 

Overall sentiment remained mixed in the high-spec industrial leasing market. In the face of the accelerated pace of digital transformation, there is still demand from technology firms, as well as creative agencies which support e-commerce activity. 

However, as Grade B office rents have reached a level where the rental gap between them and prime high-spec industrial spaces have narrowed considerably, more businesses that need quality spaces with a central location to maintain their corporate image are considering moving to Grade B officers. 

While landlords of prime high-spec industrial spaces who have maintained their rental expectations (high-S$4 psf per month) faced slow take-up, owners of less prime or older high-spec industrial spaces who are willing to offer more affordable rents (around S$3 psf per month) continue to register good take-up. 

Nevertheless, selected developments have been attracting healthy demand and driving overall rental growth. In the reviewed quarter, the average monthly rent for Savills’ high-spec industrial basket went up by 0.8% QoQ to S$3.51 per sq ft. Having inserted the recently completed 351 on Braddell development into Savills’ high-spec industrial basket, monthly rents increased by 1.7% QoQ to S$3.54 per sq ft in Q3.