Rents for industrial space fairly resilient in 2Q2016: Knight Frank

industrial park

According to Knight Frank, overall island-wide industrial rents remained resilient and improved to $2.19 psf pm in 2Q2016, based on a basket of properties monitored by the consultancy.

Rents in the Kallang – Geylang - Bendemeer industrial cluster rose 3.1% q-o-q on the back of higher rents for units with high specifications. Meanwhile, rents in the Bukit Merah – Alexandra - Jalan Kilang - Pasir Panjang cluster fell 4.2% q-o-q, owing to competition from new space added in previous quarters.

Despite instances of large companies such as Teijin, which previously occupied 1.5 million sq ft of site area in Jurong Island, relocating out of Singapore, industrial buildings with good and large floor plates of more than 50,000 sq ft continue to receive strong interest from buyers and tenants.

Warehouse facilities in the Central Region, particularly freehold assets, continue to enjoy demand. Higher transaction prices for such assets have led average island-wide prices for upper-floor strata-titled warehouse units to rise for the third consecutive quarter.

Looking ahead, Knight Frank expects sentiments in the manufacturing sector to remain muted as the Singapore Purchasing Managers’ index contracted to 49.6 in June from 49.8 in the previous month. Industrial rents are expected to continue facing downward pressure in the coming months, owing to an additional 26.2 million sq ft of space slated for completion between 2Q2016 and 4Q2016.

Demand and rents for freehold factory and warehouse units are expected to hold firm owing to the limited supply. “There are indications of improvement in industrialists’ business confidence as more industrialists started to put in sales and rental offers in the first half of the year”, says Knight Frank executive director & head of industrial Tan Boon Leong.

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