Singapore’s industrial leasing activity hits record highs in Q3
Total leasing volume grew 13.9% to 3,423.
Singapore’s industrial leasing market peaked in Q3 2021, recording a 13.9% YoY increase in total leasing volume to 3,423. Leases for single-user factories and warehouse spaces surged 77.8% and 21.7%, respectively.
Even though there was greater buying interest for single-user factory facilities for own use, Savills says leasing deals continued to climb in Q3 as there is still some mismatch between buyers and sellers’ price expectations.
Here’s more from Savills:
The warehouse segment also saw strong takeup from industries such as e-commerce, electronics and third-party logistics. Despite a slower growth (+8.1% YoY) compared with other segments, the number of tenancies for multiple-user factory units is still on the high side. This was largely led by digital and creative businesses which are expanding their real estate footprint, as well as small and medium-sized enterprises in agricultural, plastic and metal manufacturing businesses.
In terms of physical occupation, arising from new completions in the West Planning Region, the vacancy rate for single-user factory space rose 0.2 of a percentage point (ppt) QoQ to 9.3% in Q3.
However, with a relatively stable net take-up of 1.1 million sq ft, vacancy for multiple-user factories slipped by 0.1 of a ppt QoQ to 10.2%, the lowest since Q3/2013. For the warehouse segment, occupier demand in the West Planning Region remained healthy, with larger firms taking up significant space in Tuas due to a lack of ready-built ramp-up facilities in other parts of the island.
Despite an addition of 111,000 sq ft of new warehouse stock in the region, vacancy in the West Planning Region managed to ease 0.3 of a ppt QoQ to 9.8% in Q3. The vacancy rate in the East Planning Region also fell 1.1 ppt QoQ to 7.8% in Q3, the lowest since Q1/2016.
This was attributed to strong take-up from warehousing and logistics needs arising from ecommerce and consolidation of supply chains. Compared with Q2, industrial rents continued to post positive growth in Q3/2021. Savills’ average monthly rent for prime multiple-user factories registered a third consecutive quarterly increase of 1.7% QoQ to S$1.77 per sq ft.
After witnessing no growth in Q2, Savills’ average monthly rent for prime warehouse and logistics properties inched up by 0.3% QoQ to S$1.44 per sq ft, reaching its highest level since Q3/2014.