Island Wide Vacancy Level Of 22.1% In Q4/2024 For Business Parks Highest Since 2010Monthly Rents For Savills’ Prime Warehouse & Logistics Properties Increased By 4.9% Year-on-year
Savills Research revealed that the monthly rents for Savills’ prime business parks[1] showed a significant increase of 6.4% year-on-year (YoY). This is the highest since 2013.
The monthly rents for Savills’ standard business parks[2], however, remained relatively flat compared to the last four years, growing at a subdued pace at 0.2% YoY in Q4/2024. Rents for high-spec industrial spaces also continued to edge up, but at a muted pace of 0.5% YoY.
Overall, market sentiments for the business park segment remain lukewarm, although there were areas of strong take-up such as in the one-north cluster. With the completion of the first phase of Punggol Digital District in 2H/2024, the sluggish take-up in some areas drove the island wide vacancy level for business parks up from 21.6% in Q4/2023 to 22.1% in Q4/2024, the highest since 2010.
In Q4/2024, the vacancy rate in district 22, postal sector 60 area was 35.6%. Meanwhile, the cluster in district 5, postal sector 11 also recorded an increase in vacancy rate from 13.7% in Q4/2023 to 15.4% in Q4/2024.
Savills Research also noted that the monthly rental growth for prime multiple-user factory[3] moderated from 10.5% YoY in Q4/2023 to 2.8% YoY in Q4/2024, based on Savills’ basket of private industrial properties. For Savills’ prime warehouse and logistics properties[4], monthly rents increased by 4.9% YoY in Q4/2024. Despite signs of slower growth, Savills’ factory and warehouse rents reached their highest level in 10 years.
Overall, leasing demand weakened across the board in 2024, with the single-user factory segment recording the largest decline of 17.2% YoY. After a short-lived recovery, Singapore’s industrial leasing momentum softened on the back of weaker demand for single-user factory (-25% YoY) and warehouse (-16% YoY) spaces. Total leasing volume fell by 4.5% YoY in Q4. Total leasing demand for the whole year weakened by 3.7% from the previous year, hitting the lowest in the last three years.
Ashley Swan, Executive Director, Commercial & Industrial, Savills Singapore says, “While we have seen rental increase for newer, better spec-ed business park space, we expect that segment of the industrial market to continue to face challenges as vacancies rise throughout. In general, we expect all industrial segments to face challenges in 2025, but remain largely resilient.”
Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore comments, “While the full-year economic growth for 2024 outperformed the expectations, the outlook for 2025 is again expected to be buffeted by headwinds. As geopolitical and trade tensions intensify, highly trade-dependent economies such as Singapore are expected to face some downside risks to economic growth over the medium term. This is likely to arise indirectly as our trade partners may get affected by these measures.
As a big bulk of the new prime logistics spaces have been pre-committed, occupancy and rents are expected to remain stable. On the other hand, the supply boom from the upcoming completion of Punggol Digital District and redevelopment of 1 & 7 Science Park Drive could potentially put further pressure on rents and occupancy, particularly the older developments. For Business Parks, we believe that centrally-located ones may still be able to hold up rents for 2025 whilst older parks may continue to experience elevated vacancy levels and weaker rents.”