Singapore warehouse vacancies hit sub-10% for the first time in nearly 6 years

The rental index also saw the sharpest quarterly growth in 8 years.

Singapore’s logistics/warehouse segment outperformed its counterparts in the third quarter of 2021 as it recorded the sharpest quarterly growth in almost eight years. JTC’s 3Q21 industrial property market statistics revealed that the warehouse rental index grew 1.7% q-o-q in Q3. In comparison, rents for single-user, multi-user factories, and business parks only grew 0.3%-0.6%.

According to JLL, the steep 1.7% rent growth for warehouses came on the back of vacancy rate dipping to below 10% for the first time in 22 quarters. “This underscores the strength of the pandemic-led demand for warehouse space. Since the pandemic, net absorption of warehouse space had totaled 534,000 sqm, nearly 60% more than the 335,000 sqm net space addition during the same period,” the analyst adds.

Here’s more from JLL:

Overall, the industrial leasing market remained upbeat in 3Q21. JTC’s all industrial property rental index gained another 0.7% q-o-q in 3Q21 to stay on the uptrend for the fourth consecutive quarter. The islandwide vacancy rate also stayed below the 10%-mark for the second straight quarter in 3Q21, unchanged from the 9.9% recorded in 2Q21.

We expect occupier demand for industrial space to stay healthy for the rest of 2021 and 2022, driven by requirements from growth industries such as the food, electronics, media, e-commerce, technology and life science sectors. Logistics/warehouse demand is also expected to remain healthy and supported by e-commerce, food and vaccine storage/logistics requirements amid the ongoing uncertainties surrounding the COVID-19 pandemic.

The islandwide industrial rent which has increased by 1.8% in the first nine months of 2021 is poised to stay on the uptrend, and could clock a full-year growth of up to 3% in 2021.

Rent growth could be capped to within 5% in 2022 on the back of an anticipated rise in new supply. Based on JTC’s statistics, there are nearly 2 million sqm of industrial space in 2022’s pipeline. This is higher than 2021’s projected supply of about 1.6 million sqm, inclusive of the net space addition of about 0.7 million sqm in the first nine months of the year.