With office tenants on the lookout for more affordable premises in business parks, average monthly gross rents for the latter inched up by 1 percent quarter-on-quarter in Q2 2015, according to a DTZ report.
Business park rents now stand at S$5.10 per sq ft.
Based on the latest data from JTC, occupancy rate for business parks rose by 4.1 percentage-points to 85.2 percent in Q1 2015. Net demand for such space also reached its highest level of 925,700 sq ft during the first quarter since the agency began gathering statistics in Q3 2008. It is noted that JTC lags a quarter in reporting the information.
In contrast, the leasing demand for conventional factory space waned due to the weakened manufacturing industry—posting a further decline of 2.7 percent year-on-year in Q2 2015.
JTC statistics also show that net demand for multiple-user factories dropped to 1.1 million sq ft in Q1 2015 from 1.6 million sq ft in the previous quarter. Demand for single-user factories fell by 10 percent to 1.4 million sq ft.
Despite the weaker demand, occupancy rate for single-user factories remained unchanged at 92.5 percent in Q1 2015 on a quarterly basis, while that for multiple-user factories edged up by 0.6 percentage points to 86.8 percent. This is attributed to fewer completions in Q1 2015 versus those in the preceding quarter.
As such, average monthly gross rents of ground-floor and upper-storey factory space were flat at S$2.20 and S$1.75 per sq ft in Q2 2015 respectively. For hi-tech industrial premises, monthly rents held steady at S$3.35 per sq ft.
“As the manufacturing sector continues to weaken, firms are more likely to shelve their plans for expansion. Landlords are also inclined to set rents competitively and provide more flexibility to retain tenants,” said DTZ Associate Director of Research Lee Nai Jia.
Looking ahead, a total of 40.6 million sq ft of industrial space are expected to come on stream between 2015 and 2019. Of this amount, 46 percent or 18.7 million sq ft are situated within developments set to be completed in next year. However, after that year, average annual supply is forecasted to slow down to less 3 million sq ft per year.
Source: CitiCommercial, Jul 10, 2015