Rents for Singapore’s warehouse and logistics spaces are projected to increase by up to 3% in 2024, while rents for multiple-user factory spaces may grow by up to 2.2%, according to a report by Savills.
The report highlights that despite various global challenges, including inflationary pressures and slower external growth, the low supply pipeline for multiple-user factories is likely to support rental growth in this segment. Smaller units in these factories are particularly appealing to tenants looking to minimize overhead costs.
For prime warehouse and logistics spaces, rental growth is expected to remain positive but may slow down as cost-conscious occupiers drive the market. Landlords might need to adjust rental expectations with the completion of a significant amount of prime warehouse space expected next year.
In the business park sector, the completion of nearly 3.2 million square feet of new space, including the Punggol Digital District and Geneo, is anticipated to exert pressure on vacancy rates. The overall vacancy rate could rise above 22% when the first phase of the Punggol Digital District is completed in September 2024. Older business parks may face additional challenges as tenants gravitate towards newer developments, potentially leading to further pressure on rents for older properties.
Savills has revised its rental forecast for multiple-user factory spaces, projecting an increase of up to 2.2% for 2024. For warehouse and logistics spaces, the forecast remains unchanged, with an anticipated rental growth of up to 3% for the year.
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