Industrial capital values surge despite six-quarter rental plateau

Full-year space additions reached an eight-year high following a surge of completions in early 2025.

Demand for premium logistics space is expected to remain strong in 2026, as limited supply could slowly drive rents upward whilst occupiers remain cost-conscious.

“Future rent growth prospects, a lower-than-previously envisaged interest rate environment and sustained investor demand, especially for good-quality logistics/warehouse assets, could see capital value growth outpacing rent growth by end-2026, tightening yields,” JLL said in its fourth quarter (Q4) 2025 report for Singapore’s industrial market.

In Q4 2025, JLL noted that demand for higher-specification logistics/warehouse spaces held firm in Q4 2025. There were some requirements from manufacturers, logistics service providers and e-commerce firms seeking strategic relocation or expansion space.

JLL noted a year-to-date net absorption of 3.1 million square feet (sq.ft.) and a 10% vacancy rate as of Q4.

Even before the previous quarter, the industrial market was stable in the third quarter, with rents and prices continuing to climb moderately, experts said. CBRE also noted that approximately 2.26 million sq.ft. is expected in Q4 2025.

New warehouse openings in Q4 included the YCH New DistriPark at Tuas, Nippon Express' Tuas Global Logistics Centre Extension Building and Dimerco's new 35,000-sq.ft. logistics facility at 80 Alps Avenue within the Airport Logistics Park of Singapore (ALPS), JLL said.

However, new completions remained limited in Q4 2025. These included Nippon Express' new extension at 29 Tuas Avenue 13 and Sankyu's Tuas Distribution Hub at 20 Tuas Avenue 13.

“We also understand LogisHub @ Clementi was withdrawn for redevelopment. Notwithstanding, full-year 2025 net space additions reached an eight-year high following the surge in new completions in H1 [first half] 2025,” the JLL report read.

The islandwide average logistics/warehouse rent remained unchanged for the sixth consecutive quarter. Stable rent and healthy investor demand underpinned another quarter of steady capital values and yields in Q4 2025.

Notable deals included CapitaLand Ascendas REIT's purchase of 2PS1 from Vita Partners ($176.62m) and Brookfield Asset Management's acquisition of the assets at 46A Tanjong Penjuru ($113.5m) and 24 Jurong Port Road ($68.0m) from ESR-REIT.

Meanwhile, Savills said in its second-half report for Singapore’s industrial market that whilst the industrial and logistics market is expected to be weighed down by externalities, the cold store submarket is likely to perform well for the next two to three years. This will be driven by “domestic factors and therefore resistant to these externalities.”

The report noted that one of the usual users of cold storage facilities is quick-service restaurants, which have a high turnover rate because of the limited shelf life of their products.

Cold Store operators prefer clients who have a high turnover because the more they churn, the higher the requirement for supporting services, Savills said.

“Although new supply is expected to come on stream, much of the space has been underwritten by operators who have done their market demand studies prior to committing to embarking on the project,” the report read.

“Given that such facilities are specialised and require heavy capex on electrical, mechanical and refrigeration equipment, it is preferable to sign on anchors who are operators before starting the design. Multinational Cold Store operators often may wish to tailor the layout and equipment in accordance with their processes and customer types,” it added.