Savills Research reports that the average monthly rent for high-spec industrial space rose by 1.1% quarter-on-quarter (QoQ), at the same pace as Q2, to S$3.69 per sq ft, setting a record high since Savills Research started collating data in 2012.
Average industrial monthly rents have also been picking up, with rents for warehouse and logistics properties from 1.4% in Q2 to 2.8% in Q3 to S$1.51 per sq ft and rents for prime multiple-user factories increased by 0.4% QoQ to S$2.01 per sq ft. Savills’ prime business park monthly rents stabilised, following four quarters of steady rental growth, at S$5.93 per sq ft in Q3.
Concurrently, industrial sales prices continued trending up in Q3. Savills’ basket of industrial properties showed that prices for 60-year leasehold and freehold industrial properties rose by 1.2% QoQ to S$463 per sq ft and S$758 per sq ft respectively in Q3. Apart from the longer remaining tenure and nature of freehold leases, the rise in prices was driven by the strong price growth for food factory properties such as Foodfab@Mandai and Citrine Foodland @ 33 Kim Chuan.
Savills’ basket of industrial properties also showed that 30-year leasehold property prices increased at a quicker pace of 0.9% QoQ to S$308 per sq ft. This growth could be led by stronger interest among some businesses which prefer properties of a lower quantum, and therefore these are of shorter lease tenures, to mitigate their risks amid rising economic uncertainty and elevated market volatility.
Alan Cheong, Executive Head of Research Singapore adds, “The weakening global growth outlook and heightened headwinds are also expected to dampen industrial sentiments. Nevertheless, demand for industrial spaces, especially modern high specification warehouses, as well as high-specs industrial and business parks with excellent connectivity and amenities will still be underpinned by growth industries such as the logistics, food, precision engineering and biomedical sectors. For 2023, coupled with the rise in service charges, rents are expected to continue on an upward trend as landlords pass on higher business costs to tenants.”
Savills Research expect rents for prime warehouse & logistics properties to rise 2 to 5% year-on-year (YoY) for each year in 2022 and 2023. Although prime multiple-user factory spaces are forecasted to moderate from 10 to 12% YoY in 2022 to 4 to 6% YoY in 2023, it is likely to see high rental growth for newly completed food factory properties.
Savills Research provides in-depth analysis of property market trends, forecasts from our professional research team and market commentary to help you make the right property decisions. Please find the Industrial Briefing for Q3 2022 here for your reference.