Rents for city fringe business parks, high-tech factories, logistics up in 1H 2021

Singapore saw city fringe business parks, high-tech factories and logistic properties outperform amid increased demand from pandemic thriving sectors.

With the industrial property market’s performance moving in tandem with the K-shaped economic recovery, Singapore saw city fringe business parks, high-tech factories and logistic properties outperform amid increased demand from pandemic thriving sectors.

Rents for city fringe business parks, for instance, climbed 2.5% during the first half of 2021 as vacancy rates dropped to 7.8% in the second quarter of 2021 from 9.9% in the previous quarter, revealed a Cushman & Wakefield report.

High tech rents also grew 0.3% in 1H 2021, on the back of limited new supply and a drop in vacancy rates – from 16.3% in Q1 2021 to 7.8% in Q2 2021.

“Prime logistics rents grew by 0.9% in 1H 2021 as vacancy rates fell the most, from 22.4% in Q1 2021 to 10% in Q2 2021,” said the report. Rents for warehouses also increased 0.5% as vacancy rates declined from 14.7% in Q1 2021 to 9.9% in Q2 2021.

Other segments of the industrial property market, however, registered limited growth or contractions in rents.

“Outlying business parks continued to underperform, falling 1.8% in 1H 2021,” said Wong Xian Yang, Head of Research for Singapore at Cushman & Wakefield.

“Average rents were pulled down by older developments that accounted for higher vacancies due to the relocation of anchor tenants to better locations or newer developments.”

Despite lacklustre demand, rents for factories held firm in 1H 2021 on the back of limited new supply.

Cushman & Wakefield expects the K-shaped economic recovery to continue to characterise the performance of various industrial segments.

With this, city fringe business parks and science parks are both expected to register a 2% increase in rents in the second half of 2021.

A rent hike is also forecasted for high-tech factories and prime logistics, at 0.2% and 0.8%, respectively. Warehouse rents are also expected to increase by 1% in 2H 2021.

“Prime logistics, city fringe business parks and high-tech spaces will see continued demand as new economy industries such as technology, high-value manufacturing and bio-medical continue expanding amidst digital transformation and higher focus on healthcare,” said the report.

Meanwhile, rents for conventional factories are expected to remain stable, while those for outlying business parks will likely drop by 0.3% in 2H 2021.

Source: CommercialGuru, 2 July 2021