Occupiers stay cautious on space needs

• Overall new enquiries remained low in Q3 2024, continuing a trend since the start of 2024. Due to cost considerations, most occupiers preferred to renew leases in their existing premises rather than relocate or expand.
• However, there were pockets of new requirements for ambient and cold logistics/warehouse space. Some tenants facing land lease expiries at their current premises sought relocation options.

More space options are emerging

• Sabana@1TA4, which underwent extensive upgrading, was completed in early July 2024. The annex block (about 64% of total net lettable area) with warehouse and production space was leased to a manufacturer of interior products.
• Meanwhile, landlords have placed more space listings on the market, including those that could be available in 2025.

Rents and capital values plateau

• On the back of subdued demand, the average islandwide logistics/warehouse rent held steady in Q3 2024, ending 13 consecutive quarters of increases. Mirroring rents, capital values also moved sideways in Q3 2024, keeping yields steady.
• Investors remained keen on acquiring logistics/warehouse assets. For example, ESR-LOGOS REIT bought a 51% interest in the holding entity of 20TSA, comprising a manufacturing facility and ramp-up logistics/warehouse.

Outlook: No impetus for rent growth in the next six months

• The availability of more space options and occupier cost sensitivity should keep rents stable for the next six months. Rent growth could resume when demand picks up alongside stronger economic and manufacturing sector growth in 2025.
• Yields could compress by 2025 on the back of investors’ sustained interest in logistics/warehouse assets and lower borrowing costs.