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

Colliers’ He, on the other hand, highlights that new supply will come onstream at an average total of about 1.2 million sqm annually from now up until 2025, including 1.6 million sqm to be completed this year. This outpaces the 0.7 million sqm yearly standard over the past 3 years, indicating that supply is most likely to catch up to demand and also temper the rate of rental and also cost progress, she opines.

He adds that rising worries connecting to food security and accessibility to raw materials as well as needs motivated significant stockpiling activity, which contributed to more powerful need for storehouses. “The strengthening Singapore dollar offered support to stockpiling, mitigating escalation in rates as rising cost of living ends up being increasingly significant,” he mentions.

Industrial rentals grew 1.5% q-o-q in 2Q2022, up from the 1% q-o-q growth documented the previous quarter, according to information published by JTC on July 28. This marks the seventh successive quarter of growth and also the fastest quarterly development since 3Q2013. On a y-o-y basis, leas expanded 3.4% throughout the second quarter.

Industrial prices also rose, growing 1.5% q-o-q in 2Q2022 yet reducing from the 3.1% q-o-q rise noted the previous quarter. On the other hand, commercial occupancy rates inched up from 89.8% in 1Q2022 to 90% in 2Q2022.

Looking forward, Tricia Song, CBRE head of study, Singapore and also Southeast Asia, notes that industrial pipe stays “exceptionally slim”, with multi-factory pipeline anticipated to taper down from 2023 while most of storehouse supply up to 2023 is already completely pre-committed.

The development in industrial value as well as rental indices was supported by manufacturing outcome expansions in electronics and accuracy engineering, along with durable need for semiconductors, mentions Leonard Tay, head of research at Knight Frank Singapore.

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For manufacturing facilities, multiple-user manufacturing facilities saw the greatest quarterly as well as annual development in 2Q2022 at 2.1% and 3.7% respectively. “This could be attributed to the increasing need for high-specification multi-user warehouses, as occupiers seek office grade industrial rooms near the city fringe,” marks Catherine He, head of study, Singapore at Colliers.

To that end, the industrial real estate market is expected to gain from the tight supply. “Disallowing any type of sharp downturn in the global market, demand for industrial place in 2022 is expected to be effective and also tenancy must be relatively stable,” Song adds.

Storage facilities charted the toughest efficiency among all the commercial sub-segments, registering a rental increase of 2.1% q-o-q as well as 5.7% y-o-y respectively in 2Q2022. Throughout the quarter, stockroom tenancies increased to 90.9%, up from 90.3% in 1Q2022.

However, He notes that lasting demand for industrial spot will certainly still be driven by tailwinds such as Singapore’s boosting concentrate on high-value production and biomedical industries. Colliers is predicting commercial rents to increase between 2% to 4% this year, while industrial costs are anticipated to grow in between 5% to 7%.

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