Industrial rents rise for 23rd straight quarter

AI-related manufacturing and logistics demand are expected to support the market despite geopolitical risks.

The industrial rental market extended its growth streak in the second quarter of 2026, with the JTC all-industrial rental index rising 0.5% QoQ.

CBRE said this marked the 23rd consecutive quarter of rental growth and an acceleration from the 0.4% increase recorded in Q1.

Industrial property prices rose 0.6% during the quarter, slowing from 1.2% in the preceding period. Prices have now grown faster than rents for nine consecutive quarters.

Single-user factories recorded the strongest rental growth at 0.7%, followed by multi-user factories at 0.6% and warehouses at 0.5%.

Multi-user factories had the highest occupancy rate amongst the main industrial property segments at 90.5%. Occupancy reached 89.4% for warehouses and 89.3% for single-user factories.

Business park rents declined marginally by 0.1%, reversing the 0.3% increase in Q1. However, occupancy improved to 77.9% from 76.7%.

CBRE said higher-quality and well-located business park properties maintained firmer rents, whilst older or less competitive assets increasingly relied on incentives to attract and retain tenants.

Industrial net absorption reached approximately 220,000 sqm during the quarter, according to Huttons.

Strata industrial transactions also increased. Based on caveats lodged, an estimated 443 multi-user factory and warehouse units changed hands, up 20.1% quarter-on-quarter and 5.5% year-on-year.

However, Knight Frank said overall investment activity normalised from Q1, when the listing of UI Boustead REIT boosted transaction volumes.

The number of industrial deals worth at least $10m fell to 16 from 39 in the previous quarter. Sub-$10m transactions remained relatively stable at 370, compared with 383 in Q1.

About 4.4 million sq ft of industrial space is scheduled for completion in the second half of 2026, CBRE said. Single-user factories will account for 53% of the pipeline, whilst warehouses and multi-user factories will comprise most of the remainder.

Prime logistics occupancy stood at 95.7% in Q2, up from 94.8% at end-2025. CBRE expects limited supply and occupier expansion to support further rental growth in the segment.

Knight Frank expects industrial rents to increase by 1% to 3% for the full year, whilst prices could grow by 3% to 5%. Huttons forecasts both rents and prices to rise by up to 3%.

The consultancies expect demand from electronics, AI-related manufacturing, advanced production and logistics automation to support the market. However, geopolitical tensions and higher operating costs remain downside risks.

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