Chart of the Day: Industrial leasing market slumps for the third time
Around 1,794 factories and warehouses were leased in 1Q17.
This chart from Savills shows that the leasing activity in the industrial market had been slipping for three consecutive quarters already, falling 8.6% QoQ to 1,794 in Q1.
"The healthy expansion of Singapore’s economy and manufacturing sector did not contemporaneously translate into greater demand of factory and warehouse space. Industrialists are still cautious about getting new space amidst the uncertain economy and business environment," Savills explained.
Whilst the first quarter's leasing numbers were marginally above the rental volume of 1,768 units a year ago, this could be viewed as cyclical in nature as leases signed in the first quarter of the last few years have been relatively fewer.
In 1Q17, the net new supply of 2.7m sq ft outpaced demand growth of 1.3m sq ft as net demand plunged from 4.8m sq ft in 4Q16.
"The abundant supply of factory and warehouse space available continued to exert downward pressure on rents, bringing the average prime monthly rent down for all sectors in 1Q17. The factory and warehouse sector posted slower rental declines of 20.6% YoY and 3.6% QoQ in the reviewed quarter to $1.35 per sq ft per month," the research firm said.