In light of companies exploring new ways of working, Cushman & Wakefield believe that these high-quality business park spaces will “offer a credible alternative for eligible companies seeking to reduce costs.”
Cushman & Wakefield expects decentralised and high-quality business park space to be in demand as companies explore new ways of working.
It noted that the “rationale for a central office location due talent retention” may weaken amidst the increasing adoption of flexible working arrangement. This could, in turn, support flight-to-value trend.
“Good quality decentralised business park spaces offer a credible alternative for eligible companies seeking to reduce costs,” said Cushman & Wakefield.
“Given the rising demand for such spaces, investors are on the look out for redevelopment or asset enhancement opportunities.”
Perennial Real Estate Holdings, for instance, recently acquired Big Box in Jurong East and secured permission to rezone the site for business park use. To be renamed Perennial Business City, the redeveloped development will feature about 1.1 million sq ft (NLA) of business park space.
Cushman & Wakefield revealed that the industrial property market’s performance has been mixed, with city fringe business parks registering a 1.6% hike in rents for the entire 2020.
For this year, city fringe rents are expected to continue to increase, on the back of a flight-to-value trend.
Outlying business parks, on the other hand, saw rents drop 5.3% in 2020, mainly due to older stock within the submarket, while science park rents mildly increased 0.3% year-on-year.
Meanwhile, prime logistics rents, which expanded 1.7% year-on-year in 2020, are expected to “continue to outperform on the back of an e-commerce boom and preference for ramp-up logistics facilities”.
Remaining largely resilient, conventional warehouses rents grew 0.3% in 2020.
“Overall high-tech and conventional factory rents have declined in tandem with weak economic conditions,” said Brenda Ong, Executive Director of Logistics and Industrial at Cushman & Wakefield Singapore.
“For 2021, high-tech factory rents should stabilise, bolstered by bio-medical, electronics demand. On the other hand, conventional factory rents are expected to remain weak amidst an uncertain economic recovery and a continued slowdown in construction activities.”