Industrial landlords offer flexibility amidst softer demand

Demand has shifted towards spaces capable of storing dangerous goods.

The industrial and logistics sector in Singapore remains healthy despite softer demand as landlords become more accommodating to secure tenants, according to CBRE’s Asia Pacific Industrial & Logistics Trends Q3 2024 report.

Larger third-party logistics firms are consolidating operations into flagship sites without expanding their overall footprint, leading to higher availability of smaller spaces in satellite locations.

Last year, planning for logistics facilities exceeding 100,000 sq ft required two years of lead time, but immediate requirements can now be met through active sourcing. CBRE expects this trend to continue until the end of 2025, offering cost-conscious occupiers new opportunities.

In recent quarters, demand has shifted towards spaces with technical specifications such as those capable of storing dangerous goods like petrochemicals. 

There has also been increasing interest from food occupiers seeking air-conditioned dry cargo spaces, along with a rising need for cold storage facilities. Meanwhile, e-commerce platforms are consolidating and seeking cheaper space.

CBRE also noted the growing interest in Johor Bahru, where companies are attracted by the availability of special economic and free trade zones. Its proximity to Singapore and lower costs make it a preferred location for businesses, with the Johor-Singapore Special Economic Zone agreement expected to be finalised by year-end.

Graeme Bolin, executive director of Industrial & Logistics Services at CBRE Singapore, expects landlords to offer more rent-free periods or fit-out incentives to attract tenants. He advised occupiers to take advantage of the current market conditions to secure attractive space, as occupancy rates and rents are likely to rebound to end-2023 levels within the next 12 to 15 months.