Singapore’s warehouse and logistics sector is experiencing a positive shift, with rental rates projected to increase by up to 3% this year. Additionally, rents for multiple-user factory spaces are anticipated to rise by up to 2.2%. Despite some global uncertainties, including geopolitical tensions and the potential changes in interest rates by the Federal Reserve, the industrial market shows resilience. Challenges such as inflation, a slowdown in external growth, and economic impacts from China are shaping the landscape, yet opportunities for growth remain.
The limited supply of multiple-user factories is driving rental increases in this segment, as smaller units continue to be in high demand among tenants aiming to manage costs effectively. In the warehouse and logistics space, rental growth remains positive, although it may moderate as cost-conscious occupiers and a forthcoming influx of new prime warehouse spaces influence market dynamics. Landlords might adjust expectations to align with the changing market conditions.
The completion of nearly 3.2 million square feet of new business park space, including the Punggol Digital District, will introduce more options into the market. This development is expected to affect overall business park vacancy rates, which could exceed 22% this year. As newer spaces attract tenants, older business parks may face increased challenges. However, the evolving landscape offers opportunities for growth and adaptation, with revised rental forecasts reflecting a positive outlook for both multiple-user factory spaces and warehouse and logistics areas.
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