Singapore leasing volume hits two-year high of 3,205 tenancies in Q3

The volume increased by 2.1% YoY.

According to a Savills report, Singapore’s industrial leasing activity strengthened from two quarters of slowdown, with total leasing volume rising by 2.1% YoY to a two-year high at 3,205 tenancies in Q3.

“It was attributed to higher leasing demand for warehouse spaces which has 10.1% more tenancies signed, compared from a year ago. Although leasing demand for factories remained muted in Q3, total leasing volume in the reviewed quarter is the highest this year,” the report said.

Here’s more from Savills:

Regarding vacancies, those multiple-user factories eased further by 0.3 of a percentage point (ppt) QoQ to 8.4%, the lowest since 1996. It could be due to landlords revising their rental expectations or offering incentives to fill up spaces in less prime locations.

Although the vacancy for single-user factory rose by 0.3 of a ppt QoQ to 12.3% in Q3, the background is that given the fact that the authorities would only grant this type of usage upon clearance of application by users, most single-user factories have already been pre-committed before they were constructed.

End-users could take some time to move into the newly completed developments, hence driving up the vacancy level alongside the influx of new completions. On the warehousing and logistics front, leasing demand weakened, particularly from third-party logistics providers as they are reducing their footprint in the face of cost pressures.

Owing to more cautious spending, less space is required for storage amid sluggish in-store and online sales. As a result, warehouse vacancy also increased to 8.9% in Q3, compared with 8.7% in Q2.

Coupled with muted leasing demand, JTC’s industrial rental index growth continued decelerating in Q3, rising by a marginal 0.3% from the previous quarter. While multiple-user factory and warehouse rental growth moderated to 0.6% and 0.1% QoQ respectively, single-user factory rents ended the four-year growth with a 0.3% QoQ decline.

Owing to strong rental growth in some prime developments with good accessibility and amenities, Savills’ monthly prime multipleuser factory rents rose further by 1.3% QoQ to S$2.29 per sq ft in Q3. Meanwhile, Savills’ warehouse and logistics properties faced rental pressure from softer demand, thus recording a muted rental growth of 0.2% QoQ to S$1.68 per sq ft in Q3.