Global trade risks dampens industrial property demand

Singapore’s industrial rents are up, and occupancy has dipped.

Slowdown in global trade could further dampen demand in Singapore’s industrial property sector, which recently saw rents increase for the 19th consecutive quarter, several analysts have said.

The JTC All Industrial rental index saw a 24.6% increase in rents since its last trough in Q3 2020. The rental index rose by 0.7% quarter-on-quarter (QoQ), picking up from the 0.5% growth in the previous quarter.

Overall rental growth was positive across all segments and was largely driven by the multiple-user factory and business park segments. On the other hand, overall industrial occupancy declined slightly to 88.8% from 89.0% in the previous quarter, dragged down by the warehouse segment, which saw occupancy declining by 1.7%.

Catherine He, Head of Research at Colliers, said that despite uncertainties and volatility in the global trade sector, the industrial real estate sector was resilient in the second quarter of 2025, underpinned by growth in trade-related sectors such as wholesale, retail, and transportation and storage.

He added that this momentum was driven in part by a temporary boost in front-loading activities during the 90-day pause in US reciprocal tariffs, prompting companies to accelerate shipments and build up inventories.

“As a result, demand for warehouses—particularly those near key logistics nodes such as ports and airports—rose noticeably, supporting rental increases across logistics and high-specification industrial segments,” He said.

However, He warned that this boost from front-loading is expected to taper off in the second half of the year as economic activity normalises. Because of Singapore’s high degree of trade reliance, where re-exports comprise nearly two-thirds of total trade, it remains highly sensitive to external headwinds, particularly trade policy developments in the US.

Lee Sze Teck, Senior Director, Data Analytics at Huttons, said that there is increased scrutiny on the use of a country with lower tariffs to export to the US.

“Whilst there had been trade deals between some countries and the US, the tariffs had not been reset to zero. The higher costs of imports may reduce consumer demand and trade, and that may affect Singapore which is heavily trade-dependent,” Lee said

This, in turn, is making some businesses cautious. Tricia Song, CBRE Head of Research, Singapore and Southeast Asia, said that despite ongoing trade uncertainties, they saw an uptick in leasing volume in Q2 2025 across the logistics, hi-tech and business park segments. This can be attributed to active landlord leasing strategies. For instance, landlord incentives which involved fitting out units or capex support helped tenants to reduce setup time and costs.

"Looking ahead to H2 2025, business sentiment is expected to remain cautious. Whilst this may cause delays in decision making, occupiers gravitate to Singapore’s business-friendly environment, attractive labour pool and world-class infrastructure, among other factors,” Song added.

CBRE expects the warehouse project completions to peak in Q2 2025. Prime logistics rents saw a 0.5% QoQ dip, albeit easing from the 1.6% QoQ drop in Q1 2025. Rent softness was most evident in older assets with lower ceiling heights as landlords adjusted expectations to fill vacancies.

“That said, with prime logistics supply expected to moderate in H2 2025 and 2026, the logistics market may gradually shift from a tenant-favourable market towards a landlord-favourable environment by year-end,” Songsaid.