Industrial Market Loses Some Momentum 2Q2024 Savills
Nestled just a short distance away from the Novo Place Hoi Hup, JEM proudly takes its place as one of the largest suburban malls in Singapore. This vibrant shopping destination offers a convenient one-stop experience, catering to all your needs for shopping, dining, and entertainment. Featuring six levels brimming with more than 240 retail stores, JEM showcases a wide selection of international fashion brands, including well-known department store Robinsons. For all your tech cravings, you can also find electronic giants like Courts and Harvey Norman within the mall. But JEM is not just about shopping. Visitors can also catch the latest blockbuster movies at its cinema or pamper themselves with a variety of lifestyle and beauty services, making it a bustling hub for the local community to come together and enjoy.
In the second quarter of 2024, the industrial market reported a mix of performance, according to recent research compiled by Savills Singapore in an August report. Leasing activity in the industrial sector slowed down in most categories, resulting in a total of 3,123 industrial tenancies being recorded, a drop of 5.3% compared to the same quarter last year. The most impacted segment was single-use factory spaces, with a 27.3% decrease in leasing volume to 144 tenancies – the lowest since 2020. Multiple-user factory spaces saw relatively flat leasing volume, while warehouses experienced a slight increase. On the other hand, all industrial segments recorded a decline in vacancy rates in the second quarter of 2024, after experiencing an increase in previous quarters. The vacancy rate for warehouses decreased by 0.2 percentage points (ppt) quarter-on-quarter (q-o-q) to 8.7%, while the vacancy rate for multiple-user factories reduced by 0.8 ppt q-o-q to 8.7%. Single-use factories recorded a 0.2 ppt q-o-q decrease in vacancy to 12%. The vacancy level for business parks also declined by 0.3 ppt q-o-q to 21.7% in the second quarter of 2024, marking the first reduction after six consecutive quarters of increase. According to Savills, this improved vacancy rate was due to higher occupancy rates in the one-north area, although older developments in the outskirts continued to face pressure. Industrial rents continued to rise, albeit at a slower pace in some segments. A portfolio of industrial properties tracked by Savills saw a 1.1% q-o-q increase in multiple-user factory rents to $2.26 per square foot per month (psf pm) in the second quarter of 2024. Warehouse and logistics properties recorded an average rental growth of 0.6% q-o-q to $1.68 psf pm, while average business park rents inched upwards 0.1% q-o-q to $4.07 psf pm, supported by strong performance in newer clusters. The firm also highlighted that high-spec industrial spaces remained in demand, with an average rental increase of 0.6% q-o-q to $3.96 psf pm in the second quarter of 2024 for Savills’ high-spec industrial portfolio. In the sales market, strata industrial sales activity rebounded in the second quarter of 2024, with transactions surging 42.9% q-o-q to reach 513 deals – the highest transaction level in almost two years, according to Savills. The increase was primarily due to the bulk sale of 44 units at the Cititech Industrial Building on Aljunied Road by City Developments. Sales at Food Ascent, a food factory at Aljunied Road, also contributed to the volume. In terms of prices, industrial properties tracked by Savills reported slower price growth across all tenure types in the second quarter of 2024. Prices for freehold properties saw a 0.5% q-o-q increase to $830 psf, while prices for 60-year leasehold properties rose 0.7% q-o-q to $516 psf. Properties with a 30-year leasehold tenure had the smallest price growth of 0.1% q-o-q to $325 psf. Going forward, Alan Cheong, executive director of research and consultancy at Savills Singapore, believes that multiple-user factory rents may see some growth during the second half of the year, supported by a low supply pipeline. He has revised his rental growth forecast for multiple-user factories for the whole year from 0% to between 0% and 2.2%. For warehouse and logistics space, he maintains his full-year rental growth forecast of 0% to 3%. Check out the latest listings for Industrial Real Estate properties.