A balm to the wound: Industrial leasing recovers weak production

Does this signal a business boom?

There is an increasing demand for warehouses and factory offices because industrial space users are optimistic about their businesses, a Savills report says. Business park space recorded a strong performance and is expected to achieve high occupancy rates despite the increasing supply in 2016.

The leasing sector remained active as April and May, recording 1,426 deals, 18.6% short of Q1's total, but still a positive number.

Meanwhile, a total of 61 leasing transactions were recorded island-wide in April and May, and is most likely to break the record of 68 deals set in 2012 and 2013.

Here's more from Savills:

The Republic’s industrial leasing scene remains as active as in the previous few quarters. There were a total of 1,426 rental transactions in April and May. With a month to go, rental volumes for Q2/2014 are likely to surpass Q1’s total of 1,752 deals. The high volumes recorded this quarter reflect the optimism of industrialists towards the manufacturing business in the near future despite Singapore’s rather lacklustre manufacturing growth numbers relative to the greater global economy.

Meanwhile, with manufacturers battling to contain high operation costs and landlords pushing for better rental returns, rents are continuing to stagnate. Monthly rents of both upper-storey factory and warehouse units remained at S$2.00 per sq ft, while high-tech units were also unchanged at S$3.00 per sq ft per month.

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