Industrial occupancy to 'bounce back' in next quarters

The occupancy rate dropped to 89.8% in Q1 2022.

Despite a 0.4 percentage point drop to 89.8% in Q1 2022, experts believe that industrial occupancy will be able to bounce back in the next quarters.

In a report, CBRE said occupancy will be backed by "resilient industrial leasing demand."

"With supply chain disruption, demand for storage requirements from semiconductors, food, pharmaceutical and biomedical sectors is expected to remain strong for the rest of the year," CBRE said.

"In addition, we can expect renewed interest in the aerospace segment with further re-opening of borders," the analyst added.
This was echoed by Colliers, adding that the demand for industrial space will in turn support rental and price growth,

Price and rental growth, however, is expected to grow at a more moderate pace due to the anticipated surge of supply in the market, according to Colliers and Knight Frank, with the latter expecting both indices to grow by 3% to 5% for the whole of 2022.

Edmund Tie had a similar estimate for rental increases at 5%, by more for hi-tech factory and modern warehouse spaces.

"We expect that improving demand in the multi-user factory segment and the warehouse segment will be able to work through the relatively more moderate increase in supply," Edmund Tie added.

A total of 25.8 mil sf of additional industrial space is expected to be completed this year.

Whilst the additional supply may not be advantageous to price and rental growth, it should bode well for Singapore's manufacturing, according to Knight Frank adding that the sector is ramping up "production in the post-pandemic era with technology-based products and infrastructure for endemic living."

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