Industrial prices rise 0.9% in 1Q2021; rents up 0.6%: JTC

SINGAPORE (EDGEPROP) - Industrial prices and rents rose 0.9% and 0.6% q-o-q respectively in 1Q2021, marking two consecutive quarters of positive growth, according to JTC data.

Rental growth was observed across both the factory and warehouse submarkets, with the Single-User and Multiple-User Factory Rental Index increasing by 0.2% and 0.8% q-o-q respectively, while the JTC Warehouse Rental Index rose by 0.5% q-o-q. CBRE Research observes that leasing activity was stable for high-specs factory and prime logistics projects.

Overall industrial occupancy rate rose by 0.1 percentage point q-o-q to 90.0% in 1Q2021, attributed to the multiple-user factory submarket, which saw a 0.5 percentage point increase to 89%.

Meanwhile, other submarkets saw a q-o-q fall in occupancy rates. Business parks suffered a 0.7% fall, followed by single-user factories and warehouses, which fell marginally by 0.1% respectively.

The decline in occupancy rates for single-user factories and warehouses was due to project completions in the quarter. These included six single-user factory completions in 1Q2021, although all were relatively small-scale, with each below 0.20 million sq ft, observes CBRE.

The warehouse submarket also saw an injection of 0.75 million sq ft on the back of three completions in 1Q2021, with the largest site at Cogent Jurong Island Logistics Hub (0.34 million sq ft).

Due to delays caused by the pandemic, upcoming factory supply from 2Q2021 to 4Q2021 is estimated at 8.58 million sq ft, which is the highest since 2017, says CBRE.

It adds: “While the saturated factory pipeline may place some pressure on rents with several large-scale multiple-user factory projects expected to be completed this year, the positive outlook for Singapore’s manufacturing sector could lend support to rents.

“While the factory submarket remains two-tier, high-specs factory buildings will continue to see sustained demand, supported by the electronics, precision engineering and biomedical manufacturing segments.”

On the other hand, some 3.53 million sq ft of warehouse supply is estimated to come into the market from 2Q2021 to 4Q2021.

“The upcoming supply is expected to be absorbed gradually by the market, against a backdrop of tight prime logistics vacancy and healthy demand for the warehouse market from third-party logistics, food logistics and e-commerce players,” says CBRE.