High-spec industrial space average rents in Q3 reaches record high since 2012

It increased by 1.1% QoQ to $3.69 psf.

The average monthly rent for high-spec industrial space grew by 1.1% quarter-on-quarter (QoQ) in the third quarter, the highest recorded since 2012 when Savills Research started gathering data.

In a statement, Savills said the average monthly rents for warehouse and logistics properties expanded by 2.8% QoQ to $1.51 per square foot (psf), whilst rents for prime multiple-user factories rose by 0.4% to $2.01 psf.

Meanwhile, monthly rents for Savill’s prime business park stabilised at $5.93 psf following steady rental growth in the previous four quarters.

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Prices of industrial properties are also increasing, with prices of 60-year leasehold and freehold industrial properties increasing 1.2% QoQ to $463 psf and $758 psf, respectively. This was mainly due to the strong price growth for food factory properties such as the Foodfab@Mandai and Citrine Foodland @ 33 Kim Chuan.

Prices of 30-year leasehold properties climbed by 0.9% QoQ to $308 psf which could be driven by strong interest amongst businesses that prefer properties with shorter lease tenures to mitigate risks amidst rising economic uncertainty and market volatility.

Alan Cheong, executive head of Research Singapore, said industrial sentiments are expected to be dampened by the weakening growth outlook and heightened headwinds.

“Nevertheless, demand for industrial spaces, especially modern high specification warehouses, as well as high-specs industrial and business parks with excellent connectivity and amenities will still be underpinned by growth industries such as the logistics, food, precision engineering and biomedical sectors,” Cheong said.

He added that rents are seen to continue to rise in 2023 as landlords pass higher business costs to tenants.

Prime warehouse and logistics properties are expected to increase by 2% to 5% year-on-year in 2022 and 2023, Savills said.

It added that prime multiple-user factory spaces are expected to show moderate growth from 10% to 12% in YoY in 2022 to 4% to 6% in 2023, but newly completed food factory properties are likely to see high rental growth.