Industrial rents to increase up to 6% in 2023
Warehouse rents will grow by 3% to 5%.
The majority of industrial property types will experience further growth this year despite headwinds and subdued growth in the manufacturing sector, with rents projects to increase by 4% to 6% this year.
This is following a 6.1% growth in the industrial market in the leasing volume in the second quarter on the back of more tenancies signed for multiple-user factory spaces during the period.
In a report, Savills said that prices and rents will continue its upward trajectory for the rest of the year.
Growth in the multiple-user factories segment is expected to be driven by new growth areas such as high-value manufacturing industries.
“We believe that both rents and prices for industrial and warehouses should continue to rise in 2023. One factor keeping these two afloat is inflation,” said Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore.
“The other is higher interest rates. Also, as most landlords are financially strong, it puts them in better stead to pass their higher interest expenses to tenants,” he added.
Meanwhile, the rents for warehouses will increase by 3% to 5% due to the strong demand for modern and high-specification logistics spaces, Savills said.