Sales of industrial space are at their lowest since 2000, while rents slide, but the worst may be over, says DOMINIC PETERS
WHILE most economic indicators point to an improvement, the industrial property market remains depressed today as the weak business environment is likely to persist, with global demand still subdued. The first eight months of the year saw 436 industrial sale transactions, a drop of more than 45 per cent from the corresponding period last year, according to caveats lodged. This is the lowest volume since 2000.
Weak demand for industrial space continues to weigh on industrial rents and prices this year. The average monthly rents of Savills’ basket of prime flatted factories and warehouses in central Singapore slid lower in Q3. Flatted factories saw rents slip to S$1.35 – S$1.65 per sq ft, from $1.70 – $2.00 psf in Q4 2008. Warehouses saw a slide from $1.70 – $2.10 psf at the end of 2008, to S$1.25 – S$1.55 psf.
High-tech industrial rents are also experiencing downward pressure as relocation of office users to high-tech industrial space slows down. Office users are now less inclined to relocate to high-tech industrial space as asking office rents in the CBD have fallen significantly and office landlords keen to retain their existing tenants are offering extras like rental concessions and fitting out costs. Consequently, average monthly high-tech rents fell from a high of S$2.50 – S$3.80 psf in 2008 to S$2.40 – S$3.20 psf recently. For instance, monthly asking rents of high-tech industrial space in city-fringe areas like Frontech Centre dipped from about S$4 psf in Q1 to S$3.60 per sq ft in August. Continue reading
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