Singapore industrial leasing volume breaches 5-year quarterly average 

Leasing volume increased 43.7% to 3,381 transactions in Q2 2021.

Owing to the strong leasing interest for factory and warehouse spaces, Savills reports that the industrial leasing scene was more active in Q2/2021. Leasing volume was up 43.7% YoY to 3,381, far surpassing the quarterly average of around 2,400 transactions for the last five years. 

From Savills’ focal group discussions with industrial market specialists, for factory space, it appears that more companies still prefer leasing to owning, especially the multinational corporations (MNCs). On the other hand, for warehousing space users, there is a mixed preference amongst users with sales and leasing demand evenly balanced. In Q2/2021, leases for multiple-user and single-user factories increased by 46.6% YoY and 43.0% YoY respectively, while that for warehouses went up by 30.3% YoY. 

Here’s more from Savills:

Arising from strong leasing demand, vacancy rate of multiple-user factory fell 0.7 of a percentage point (ppt) QoQ to 10.3% in Q2/2021, the lowest since Q3/2013. Despite an improvement in net demand, vacancy for single-user factory and warehouse segments remained relatively flat from the previous quarter as new supply outpaced net demand. As the construction industry slowly overcome the delays caused by the pandemic, more new completions come to the fore with some major projects such as Cogent Jurong Island Logistics Hub and Digital Loyang II data centre being completed in Q2. Consequently, this led to downward pressures on the overall occupancy level for the two segments. 

Industrial rents trended along with the demand across respective segments. While rents for multiple-user factories were recovering after a year of decline from Q4/2019, that for warehouses were starting to stabilise after rising for the last few quarters. In Q2/2021, JTC’s rental index for multiple user factories rose at a faster pace at 1.0% QoQ. Similarly, Savills’ average monthly rent for prime multiple-user factories increased by 1.4% QoQ to S$1.74 per sq ft in Q2, compared to the 1.1% QoQ increase in Q1. On the other hand, warehouse rental growth continued to slow in Q2, with JTC’s rental indices inching up 0.2% QoQ. From Savills’ basket of industrial properties, the average monthly rent for prime warehouse and logistics properties remained flat at S$1.44 per sq ft.