Factory and warehouse rents in Singapore declined further during the first quarter as demand waned further, with manufacturing output (NODX) falling for the 13th consecutive month in February, according to a CBRE report.
“Leasing volume for factory and warehouse extended its downward trend in Q1 2016. Occupiers held off expansion plans while relocations dwindled as obtaining budget approvals for capital expenditure remained one of the major stumbling blocks. Given the subdued manufacturing environment, industrialists’ focus has largely been on optimising operations and cost reduction,” said the consultancy.
In particular, monthly rents of ground floor factories declined by 1.7 percent quarter-on-quarter and 6.5 percent year-on-year to S$1.73 per sq ft, while upper floors posted a larger drop of 2.1 percent and 7.3 percent respectively to S$1.39 per sq ft.
Similarly, monthly rents of ground floor warehouses slid by 2.3 percent to S$1.71 per sq ft compared to the previous quarter and down 6.3 percent versus the same period in 2015. The top levels also respectively recorded a quarterly and yearly rental decline of 2.9 percent and 8.5 percent to S$1.34 per sq ft.
On the other hand, rents of business parks were more resilient during the period under review.
Rents in the city fringe remained unchanged at S$5.40 per sq ft on a quarterly basis but fell 1.8 percent on yearly terms, while for those in the rest of Singapore was stable at S$3.65 per sq ft.
However, the vacancy rate of business parks rose to 9.2 percent during the first quarter from 8.8 percent in Q4 2015, CBRE added.