SINGAPORE (EDGEPROP) - Industrial rents fell by 0.7% q-o-q in 2Q2020, according to the latest JTC data.
(Source: Cushman & Wakefield)
The decline in rents was across all segments, with single-user factory rents falling the steepest at 1%. Multiple-user factory rents, meanwhile, decreased by 0.5% q-o-q. Business park rents were the most resilient, falling by only 0.2% q-o-q.
Despite the weak economic backdrop, the occupancy rate of single-user factories rose by 0.4 percentage point to 91.1%. In contrast, the occupancy rate of multiple-user factories dipped by 0.4 percentage point to 87.5%.
On the other hand, rents in the warehouse segment shrank by 0.7% q-o-q in 2Q2020. On the back of increased demand from government-led stockpiling, e-commerce, food logistics and third-party logistics players, warehouse occupancy rose by 0.8 percentage point to 88.3%.
The increase in warehouse occupancy was observed mainly in the East, North-east and West regions, where many prime logistics buildings with higher specifications are located, says Desmond Sim, head of research for Southeast Asia, at CBRE.
The JTC data also shows that industrial prices declined by 1% q-o-q in 2Q2020. The fall in prices was mainly driven by the multi-user factory segment, which fell 1.6% q-o-q, while single user factory prices fell 0.6% q-o-q.
Cushman & Wakefield’s (C&W) basket of rents for business parks in the city rose by 2.4% q-o-q in 2Q2020. This is supported by firms seeking out business park spaces in the city fringe to locate secondary offices that complement their main office in the CBD, as a way to manage real estate costs, says C&W.
“The pandemic has not necessarily triggered a sudden movement by the corporate occupiers into business park city-fringe locations such as Mapletree Business City I and II,” says Christine Li, head of research, Singapore and Southeast Asia, at C&W. She adds that “it has always been a strategy for occupiers to consider business parks as a viable alternative for a secondary operating location”.
Moving forward, while CBRE expects factory rents to be less resilient amid the unfavourable economic conditions, heightened demand for prime logistics spaces and limited upcoming supply, compounded by delays in project constructions, could help to lend some support to overall warehouse rents, it says.
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