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

The development in industrial cost and rental indices was supported by making output expansions in electronics as well as accuracy engineering, along with resistant necessity for semiconductors, notes Leonard Tay, head of research study at Knight Frank Singapore.

Colliers’ He, on the other hand, highlights that new supply will come onstream at a regular total amount of around 1.2 million sqm each year from now until 2025, including 1.6 million sqm to be finished this year. This exceeds the 0.7 million sqm yearly standard over the past 3 years, implying that supply is likely to catch up to demand and temper the speed of rental as well as cost progress, she suggests.

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Industrial rents grew 1.5% q-o-q in 2Q2022, up from the 1% q-o-q development documented the previous quarter, according to data launched by JTC on July 28. This marks the 7th consecutive quarter of growth and also the fastest quarterly development since 3Q2013. On a y-o-y basis, rentals grew 3.4% during the second quarter.

However, He notes that long-term need for commercial area will certainly still be driven by tailwinds such as Singapore’s increasing concentrate on high-value production and biomedical fields. Colliers is forecasting industrial rentals to develop between 2% to 4% this year, while industrial rates are predicted to grow between 5% to 7%.

For factories, multiple-user factories saw the highest possible quarterly as well as yearly growth in 2Q2022 at 2.1% and also 3.7% specifically. “This could be attributed to the growing demand for high-specification multi-user warehouses, as occupiers search for workplace grade industrial rooms near the city edge,” marks Catherine He, head of study, Singapore at Colliers.

Looking ahead, Tricia Song, CBRE head of study, Singapore and Southeast Asia, notices that commercial pipe remains “very thin”, with multi-factory pipe expected to taper down from 2023 while most of storehouse supply up to 2023 is already totally pre-committed.

To that end, the commercial property market is expected to take advantage of the limited supply. “Disallowing any sharp downturn in the international economy, need for industrialized area in 2022 is expected to be strong as well as occupancy ought to be relatively secure,” Song includes.

Warehouses charted the toughest performance among all the industrial sub-segments, signing up a rental boost of 2.1% q-o-q and 5.7% y-o-y specifically in 2Q2022. Throughout the quarter, storehouse tenancies raised to 90.9%, up from 90.3% in 1Q2022.

He includes that increasing problems associating with food security and access to raw materials and requirements triggered substantial stockpiling task, which contributed to more powerful need for warehouses. “The reinforcing Singapore dollar provided assistance to stockpiling, alleviating escalation in rates as rising cost of living comes to be significantly significant,” he remarks.

Industrial costs additionally climbed, expanding 1.5% q-o-q in 2Q2022 yet relieving from the 3.1% q-o-q surge reported the previous quarter. On the other hand, industrial occupancy prices inched up from 89.8% in 1Q2022 to 90% in 2Q2022.

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