Industrial Rents Reach Highest Level Since 1996 With Q4 2024 Growth

As we step into the final quarter of 2024, the industrial property market in Singapore has reached a significant milestone. According to JTC's report, industrial rents have surged to their highest level since Q2 1996, marking the 17th consecutive quarter of growth. This remarkable trend has been driven primarily by the multiple-user and warehouse segments, which have seen positive rental growth.

The multiple-user segment, which includes factories with multiple users, has been a significant contributor to this growth. This segment has seen strong demand from various industries, including the manufacturing sector, which has been expanding its operations. The growing interest from the logistics and e-commerce sectors has also played a crucial role in driving up rents in this segment. The limited supply of industrial space, coupled with strong demand, has created a supply-demand imbalance that has put upward pressure on rents.

Similarly, the warehouse segment has also contributed to the overall rental growth. The increasing demand for logistics and e-commerce services has led to a surge in demand for warehouse and distribution space. This increased demand, coupled with limited supply, has resulted in higher rents for warehouse space. The growing interest from the manufacturing sector, which requires storage and distribution space for raw materials, finished goods, and inventory, has further supported the growth in rents in this segment.

Despite the significant increase in industrial rents, the overall occupancy rate in Singapore has remained flat. This can be attributed to the significant supply of new industrial space entering the market, which has helped mitigate the upward pressure on rents caused by strong demand. The multiple-user factory and business park segments have experienced declining occupancy rates, as tenants have been more selective in their leasing decisions, opting for newer and more modern facilities. In contrast, the warehouse segment has seen positive rental growth and stable occupancy rates, driven by strong demand from logistics and manufacturing companies.

As we look ahead, the industrial property market in Singapore is expected to remain resilient, supported by limited new supply and steady demand across various real estate segments. However, the market is also expected to face mixed signals from industry players due to an uncertain macroeconomic outlook. The upcoming release of the Urban Redevelopment Authority's Master Plan 2025 is also expected to contribute to uncertainty in the sector.

In conclusion, the industrial property market in Singapore has reached a significant milestone, with industrial rents reaching their highest level since Q2 1996. The multiple-user and warehouse segments have been the main drivers of this growth, supported by strong demand from various industries and limited supply. Despite the increase in rents, the overall occupancy rate has remained flat, with the multiple-user factory and business park segments experiencing declining occupancy rates. As we look ahead, the market is expected to remain resilient, supported by limited new supply and steady demand, but also facing mixed signals from industry players and uncertainty from upcoming policy shifts.