Leasing volumes in industrial market grows 6.1% YoY in Q2

There were 3,298 tenancies in the second quarter of 2023.

Leasing activity for industrial properties remained busy, with average monthly rents of prime multiple-user factories grew 5.3% QoQ to $2.13 per square feet in Q2 2023. 

According to Savills research, rising inflation and high demand for logistics and food spaces brought average monthly rent by 4.5% QoQ to $1.61 per sq ft in Q2 2023.

Industrial assets prices for 30- and 60-year leasehold industrial properties increasing 1.4% and 2.4% QoQ to $320 per sq ft and $495 per sq ft respectively in Q2 2023. 

From 1.6% QoQ in Q1, prices for freehold properties rose 1.1% QoQ to $797 per sq ft.

However, prime business park monthly rents fell 1.0% QoQ to $5.89 per sq ft in Q2, while standard business park monthly rents rose 3.2% QoQ to $4.11 per sq ft.

The market may experience elevated vacancy rates but with most landlords are financially strong, it helps them to pass both inflation and higher interest expenses to tenants.

"Industrial properties on shorter-term land leases may see prices come under upward pressure when companies downgrade from expensive longer-term commitments to free up capital," said Alan Cheong, Savills Research.