Tougher subletting rules hit industrial rents
Rents dropped 6.3% in the first nine months.
The downward pressure on industrial rents continued into the 3Q of 2016. The rental decline for all industrial registered 2% Q-o-Q, led by the decline in the single-user factories. This brings the total rental decline in the first 9 months of this year to 6.3%.
Cushman & Wakefield director of research Christine Li notes that one reason for the persistent weakness in the single-user factories could be the tightening of the JTC's subletting rules which limit the maximum amount of space that the main occupier of a JTC site can lease out to 30% of the total gross floor area (GFA), down from 50% previously.
"Coupled with the slowdown in the economy and a spike in the completions, the net absorption in the first 9 months of the year amounted to only 51k square metres (sqm) and 105k sqm for single-user and multi-user, compared to 195k sqm and 311k sqm respectively over the same period last year," she said.