Multiple-user factories drive Singapore’s Q2 industrial leasing volumes

Industrial tenancies grew 6.1% to over 3,200 in Q2.

According to a Savills report, the leasing activity in Singapore’s industrial market remained active, with leasing volume rising 6.1% YoY to 3,298 tenancies in Q2/2023. 

The increase was due to more tenancies signed for multiple-user factory spaces, which rose 10.6% YoY to its highest in the last two years. 

Here’s more from Savills: 

Meanwhile, leasing transactions for single-user factory and warehouse segments fell by 5.7% and 13.6% YoY respectively. Although leasing activity for the two segments had been down, the rents recorded in Q2 were higher than a year ago. Apart from rental increases, the higher total rental value could be due to a rebound in demand for larger facilities. 

The vacancy rate for multiple-user factory fell 1.0 percentage point (ppt) QoQ to 10.1% in Q2, reversing three consecutive quarters of increase. This rate is the lowest since Q4/2021. While vacancy rate for single-user factory remained relatively flat at 11.4% in Q2 (11.3% in Q1), that for warehouse eased 0.7 of a ppt QoQ to 9.0% in Q2. The improvement was largely attributed to healthy take-up in the West and North Planning Region. 

JTC’s overall industrial rents continued to increase further for eleven consecutive quarters in Q2/2023, reaching its highest record in the last eight years. Rents rose across the board in Q2, albeit at a slower pace for single-user factory and warehouse spaces. 

Nonetheless, prime rents remained strong, with Savills’ average monthly rents for prime multiple-user factories rising by 5.3% QoQ to S$2.13 per sq ft in Q2. Alongside rising inflation and strong demand for logistics and food spaces, the average monthly rents for prime warehouse and logistics properties in the Savills’ basket increased by 4.5% QoQ to S$1.61 per sq ft in Q2.