Rents for multiple-user factory and warehouse spaces to maintain a steady pace in 2024

Against a backdrop of external headwinds and an excess of new supply compared to demand, industry experts predict a stagnant outlook for industrial rental growth in the coming year.

Alan Cheong, Executive Director for Research and Consultancy at Savills Singapore, highlighted that the growth in industrial rentals during 2024 is likely to be concentrated within the logistics sector.

“Even as industrialists adopt a more conservative approach in their rental negotiations and expansion plans, certain segments within the industrial landscape are poised to outperform others,” reported Savills.

“New economy assets, such as modern logistics, high-spec industrial, and business park developments, are expected to capitalise on the tailwinds of structural trends.”

In the third quarter of 2023, prime industrial rents continued to trend upward. Multiple-user factories experienced a 4.3% quarter-on-quarter increase to $2.22 per square foot, while warehouse and logistics properties saw a 0.6% quarter-on-quarter rise to $1.62 per square foot.

The JTC’s rental index for All Industrial Property registered a 7.1% year-to-date increase, with multiple-user factories and warehouses rising by 8.2% and 6.8%, respectively.

Savills emphasised the scarcity of prime logistics properties and their near-full capacity, noting that the few new completions scheduled by the end of 2025 have already secured robust pre-commitment rates.

“This may provide additional momentum to the rental growth for modern warehouse facilities, particularly those in strategic locations. High-spec industrial facilities and business parks, boasting excellent amenities and accessibility, are also expected to sustain potential spillover demand from the current tightly packed CBD office market,” stated Savills.

Looking ahead to 2024, rents for multiple-user factory and warehouse spaces are projected to maintain a steady pace due to an influx of supply, elevated operating costs, and challenging business conditions both domestically and internationally.

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