The industrial market saw mixed performance in 2Q2024, according to research compiled by Savills Singapore in an August report. Industrial leasing volume lost momentum as leasing demand softened across most segments. A total of 3,123 industrial tenancies were recorded last quarter, declining 5.3% y-o-y.

Single-use factory spaces were hit hardest, with leasing volume plummeting 27.3% y-o-y to 144 tenancies — the lowest since 2020. Leasing volume for multiple-user factory spaces remained relatively flat, while warehouses recorded a marginal increase.

On the flipside, all industrial segments registered a decline in vacancy rates in 2Q2024, reversing from increases in previous quarters. The vacancy rate for warehouses decreased by 0.2 percentage points (ppt) q-o-q to 8.7%, while the vacancy rate for multiple-use factories eased 0.8 ppt q-o-q to 8.7%. Single-use factories recorded a 0.2 ppt q-o-q fall in vacancy to 12%.

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The vacancy level for business parks eased 0.3 ppt q-o-q to 21.7% in 2Q2024, charting the first decline after six consecutive quarters of increase. Savills says the improved vacancy rate was underpinned by better occupancies in the one-north area, though older developments in the outskirts remain under pressure.

Industrial rents continued to rise, albeit at a slower pace in some segments. A basket of industrial properties tracked by Savills logged a 1.1% q-o-q increase in multiple-user factory rents to $2.26 psf per month (pm) in 2Q2024. Warehouse and logistic properties registered average rental growth of 0.6% q-o-q to $1.68 psf pm, while average business park rents edged upwards 0.1% q-o-q to $4.07 psf pm, supported by strong performance in newer clusters.

Savills adds that high-spec industrial spaces continue to remain attractive. The firm’s high-spec industrial basket posted an average rental increase of 0.6% q-o-q to $3.96 psf pm in 2Q2024.

In the sales market, strata industrial sales activity rebounded in 2Q2024, with transactions surging 42.9% q-o-q to hit 513 deals — the highest transaction level in almost two years, says Savills.

This was predominantly driven by the bulk sale of 44 units at strata industrial development Cititech Industrial Building on Aljunied Road by City Developments. Sales at Food Ascent, a food factory at Aljunied Road, also contributed to the volume.

In terms of prices, industrial properties tracked by Savills indicated slower price appreciation across all tenure types in 2Q2024. Prices for freehold properties inched up 0.5% q-o-q to $830 psf, while prices for 60-year leasehold properties rose 0.7% q-o-q to $516 psf. Properties with a 30-year leasehold tenure saw the smallest price growth of 0.1% q-o-q to $325 psf.

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Looking ahead, Alan Cheong, executive director of research and consultancy at Savills Singapore, believes that multiple-user factory rents may see some growth during the rest of the year, backed by a low supply pipeline. He has revised his rental growth forecast for multiple-user factories for the whole year from 0% to between 0% and 2.2%. For warehouse and logistics space, he maintains his full-year rental growth forecast of 0% to 3%.

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