Prime warehouse and multiple-user factory rents soften despite gains in JTC's broader rental indices, while business parks and high-spec industrial assets show resilience
Singapore’s industrial rental market showed increasingly divergent trends in the third quarter of 2026, as Savills Singapore's prime rental baskets recorded declines in both the warehouse and multiple-user factory segments despite continued gains in JTC’s broader rental indices. Meanwhile, prime business park and high-specification industrial rents continued to rise, reflecting occupiers' preference for newer, better-equipped facilities.
Factory and warehouse leasing activity softened further during the quarter, with transaction volume falling by 29.0% year-on-year (YoY) to 2,174 deals, its lowest quarterly level since 2017. Activity declined across all segments as external uncertainty and cautious business sentiment prompted occupiers to defer expansion plans and adopt a more selective approach to space requirements.
While JTC's multiple-user factory and warehouse rental indices rose by 0.3% and 1.0% quarter-on-quarter (QoQ) respectively, Savills' prime rental baskets pointed to mounting pressure at the upper end of the market. Prime warehouse and logistics monthly rents recorded their first decline after five consecutive quarters of growth, falling by 2.7% QoQ. Similarly, prime multiple-user factory rents declined by a further 1.3% QoQ, their lowest level in three years.
The divergence reflects differences in the market segments tracked by JTC's broader rental indices and Savills' selected prime property baskets, with the latter indicating growing rental pressure among prime assets as occupiers become increasingly cost-conscious.
Ashley Swan, Executive Director, Commercial & Industrial, Savills Singapore, said: "Cost pressures remain at the forefront of occupiers’ decision-making and have led to them being increasingly selective with their real estate decisions as they re-align these considerations with operational needs. This more measured approach coupled with increased demand from the technology as well as advanced manufacturing sectors is reflected in the stronger performance of the high-specs industrial and newer business park segments where newer, more efficient and better equipped facilities generally offer increased value. In contrast, we expect older facilities to continue to face challenges going into the new year with limited supply helping to soften any decline."
In contrast, Savills' business park rental basket returned to growth after a short-lived decline in the preceding quarter. Standard business park monthly rents rose by 0.5% QoQ, while prime monthly rents increased more strongly by 2.6% QoQ. The outperformance of prime space reflects occupiers' continued flight to quality, with demand favouring newer workplaces offering superior specifications, sustainability features and tenant amenities.
This preference was similarly evident in the high-specification industrial segment, where rents rose by 1.4% QoQ. Demand from technology, advanced manufacturing and business services occupiers continued to favour newer, better-equipped facilities.
However, performance remained uneven across the business park market. Vacancy in the Central Planning Region fell to 10.8%, its lowest level since Geneo's completion in early 2025. In contrast, weaker demand in older business park clusters in the East and West Planning Regions contributed to a 0.7 percentage point increase in the islandwide vacancy rate to 22.8%.
Looking ahead, new industrial supply is expected to remain limited in 2026, with 706,000 sq ft of multiple-user factory space and 2.0 million sq ft of warehouse space in the pipeline, well below their respective four-year annual averages of 3.3 million sq ft and 3.0 million sq ft. This should cushion the impact of softer demand, with Savills forecasting JTC's multiple-user factory rental index to remain flat in 2026 and its warehouse rental index to rise by 1%. (See Table 1)
Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore, said: "Despite Singapore's stronger economic performance, industrial rental growth has not kept pace with the broader economy as businesses continue to face operating cost pressures. Limited new supply should help stabilise the market, but rental performance is likely to diverge increasingly by asset quality. Newer business parks and high-specification industrial developments should continue to outperform, while older properties may face greater pressure to upgrade or reposition."
Table 1: Savills Forecast of JTC Rental Indices for Multiple-User Factory and Warehouse Segments