Singapore industrial leasing volume down 4.6% to 3,119 deals in Q2

The overall warehouse vacancy rate was unchanged at 10.6%.

Industrial leasing activity in Singapore continued to moderate in the second quarter, with transaction volume falling 4.6% year-on-year to 3,119 deals, as cautious business sentiment kept occupiers measured in their expansion plans, according to Savills.

Savills said softer demand was evident across most industrial asset classes, particularly single-user factories and warehouses. However, occupancy fundamentals remained resilient.

The single-user factory vacancy rate edged down to 10.7% from 10.8% in the first quarter, its lowest level in four years, despite new supply. Savills attributed the stability partly to the completion of VisionPower Semiconductor Manufacturing Company's fully owner-occupied Tampines campus.

Multiple-user factory vacancy also improved, falling to 9.5% from 9.8%, supported by steady occupier demand.

Warehouse demand softened across most regions, although net absorption of 446,000 sq ft in the West Region, likely supported by newer logistics facilities, offset weaker performance elsewhere. The overall warehouse vacancy rate consequently remained unchanged at 10.6%, highlighting occupiers' preference for modern logistics space over older stock, Savills said.

Rental performance remained positive but increasingly differentiated by asset quality. JTC's warehouse rental index rose 0.5% quarter-on-quarter in Q2, while Savills' basket of prime warehouse and logistics assets recorded stronger growth of 2.3% to S$1.88 per sq ft.

The multiple-user factory segment was more mixed. While JTC's rental index increased 0.6% quarter-on-quarter, Savills' prime multiple-user factory rents fell 1.4% to S$2.24 per sq ft, a two-year low.

Savills attributed the divergence to increasingly selective occupier demand. Tenants are prioritising efficiency and cost optimisation, resulting in softer demand for larger, higher-specification factory space and downward pressure on rents despite broadly stable occupancy.