Singapore industrial leasing slows but demand for quality space remains firm

Robust take-up pushed factory vacancy down to a 3-year low of 10.8%.

Leasing activity in Singapore's industrial market moderated in the first quarter of 2026, although demand for logistics and high-specification facilities remained resilient, according to Savills.

The consultancy said industrial leasing transactions fell 1.2% year-on-year to 2,867 deals in Q1 as occupiers adopted a more cautious approach. Demand remained focused on logistics, e-commerce, advanced manufacturing and engineering firms seeking efficient, future-ready facilities.

Despite the addition of more than 800,000 sq ft of factory space, factory market fundamentals improved. Robust take-up in the North and West planning regions pushed single-user factory vacancy down to a three-year low of 10.8%, while net absorption of 654,000 sq ft in multiple-user factories reduced vacancy to 9.8%.

Warehouse performance was more uneven. Occupied warehouse space in the West planning region expanded by 220,000 sq ft despite new supply, while vacancy in the North rose to an eight-year high of 17.5% after occupied space contracted by 107,000 sq ft. Islandwide warehouse vacancy edged up to 10.6% from 10.2% in the previous quarter.

Savills said rental growth remained positive but moderated. Its basket of prime warehouse and logistics assets recorded rental growth of 0.4% quarter-on-quarter to S$1.83 per sq ft, while prime multiple-user factory rents fell 1.4% to S$2.27 per sq ft, highlighting increasing occupier selectivity and a growing preference for modern, strategically located industrial assets.