Singapore business park vacancy hits 13-year high of 22% in Q1

Blame it on the softer demand in the East Planning region.

In a recent report, Savills said the islandwide vacancy level for business parks in Singapore rose again by 0.4 of a ppt QoQ to 22.0% in Q1, reaching the highest since 2011. 

This was mainly due to softer demand in the East Planning Region, where vacancy level in Q1 went up by 1.3 ppt QoQ to 29.4%, hitting a record high since 2009. 

Here’s more from Savills:

Business parks in suburban areas remained under pressure as some tenants right-sized their backend operations and more tech companies kept in pace with hybrid work adoption. Although business parks in the Central Planning Region showed greater resiliency, nevertheless, the vacancy level also worsened to 11.6% (+0.6 of a ppt QoQ) as the take-up rate remained weak. 

Meanwhile, a pick-up in demand in Clean Tech Park ended a two-year increase in vacancy level in the West Planning Region, reducing it by 1.1 ppt QoQ to 41.1% in Q1. 

Nonetheless, business park rents in Q1 were lifted by newer developments. With the index of business park rents tracked by JTC posting a strong growth of 2.1% QoQ, Savills’ prime business park monthly rents increased by 3.7% QoQ to S$6.11 per sq ft in Q1. Some landlords of standard business park properties are keeping their rental expectations realistic to improve occupancy, hence Savills’ standard business park monthly rents saw a slower growth of 0.8% QoQ to S$4.06 per sq ft in Q1. 

High-spec industrial spaces, especially those with good accessibility, remain attractive as the supply of such premises has been limited. With the new completions last year, healthy demand supported the rental growth for high-spec industrial space. 

According to Savills’ high-spec industrial basket, the average monthly rent increased 1.7% QoQ to S$3.96 per sq ft in Q1. This increase is driven mainly by buildings located close to MRT stations and a wide array of amenities.