Global economic headwinds weigh on demand

• Global uncertainties kept occupiers cautious on their logistics/warehouse space requirements, with limited new enquiries and strategic take-up in Q1 2025.
• During the quarter, German speciality chemicals firm Munzing set up a 500 sq m (c.5,382 sq ft) warehouse near its new regional office in the German Centre, with plans to relocate to a 3,000 sq m (c.32,292 sq ft) warehouse by the end of 2025.

Completion of new multi-tenanted logistics/warehouse facility at 36 Tuas Road

• The redevelopment of 36 Tuas Road was completed in Q1 2025, with a commitment rate of more than 50%. The air-conditioned logistics/warehouse facility is the first of three multi-tenanted logistics/warehouse developments due for completion in 2025.
• Meanwhile, landlords continue to upgrade or redevelop aging assets. In Q1 2025, CapitaLand Ascendas REIT unveiled plans to redevelop Logis Hub @ Clementi in Q4 2025. The new facility should be ready by 2028.

Stability in rents and capital values extends to the third consecutive quarter

• Occupiers stayed cost-conscious in Q1 2025, while some landlords were more flexible during lease negotiations. This has kept the average islandwide logistics/warehouse rent stable for the third consecutive quarter.
• Amid steady rents and investors’ sustained interest in logistics/warehouse acquisition opportunities, capital values held firm for the third consecutive quarter, translating to another quarter of stable yields.

Outlook: Rents are likely to stay flattish for the rest of 2025

• Less sanguine demand prospects on the back of heightened macroeconomic uncertainties including an escalating global tariff war are expected to keep occupiers cost conscious and rents flattish for the rest of 2025.
• The softer rent outlook is expected to moderate capital value growth in 2025. However, sustained investors’ interest for higher-yielding assets could tighten logistics/warehouse yields by the end of 2025.