Average monthly gross rents of hi-tech industrial space and business parks fell for the fourth consecutive quarter by 3.3% and 2.1% to $2.95 psf and $4.60 psf respectively, according to Edmund Tie & Company (ET&Co). Occupancy rates of business parks have been declining for the past four quarters and stood at 78.5% in 2Q2016. Rents in the older business parks faced greater pressure with 1.6 million sq ft of business parks expected to be completed in 2016.

ET&Co reckons that the softening of rents is expected, given Singapore’s weaker manufacturing performance. Singapore’s Purchasing Manager’s Index remained below the expansion threshold of 50 for the 14th straight month in August 2016.

Meanwhile, the growth in demand for conventional industrial space has contracted further as global demand for exports remains weak. Thus, conventional industrial space saw a larger fall in rents. Monthly gross rents of first-storey factory space dipped by 3.9% q-o-q to $1.85 psf, while that of upper-storey factory space declined by 3.3% q-o-q to $1.45 psf. As such, rents for conventional factory space are expected to fall by 14% to 16% in 2016.

ET&Co remains optimistic of the outlook for the industrial sector in the next 10 years following the government’s push for the industry transformation map in precision engineering and plans to grow the remanufacturing sector in the Tengah area.