Despite seasonal slowdowns, structurally driven demand remains intact

• Early in the quarter, market activity softened as the Chinese New Year and Hari Raya holidays slowed business momentum, with many occupiers deferring key operational decisions such as warehouse relocations.
• Logistics, automotive, medical and Electrical & Electronics (E&E) sectors remained active in their search for new space, with notable demand from businesses supporting the data centre supply chain.

Supply remains stable, while consolidation into newer warehouses lifts vacancy in older stock

• No new projects were completed in the first quarter of 2026, and the total stock of Grade A warehouse space remains unchanged at 36.78 million sq ft.
• Vacancy rose to 6.6% from 5.7% following Maersk’s consolidation from its previously leased third-party warehouse into a new building. The trend of tenant consolidation into newer, higher-quality assets has freed up older industrial space in the market.

Stable rentals and yields reflect cautious investment sentiment and a continued preference for high-quality logistics assets

• Rental rates remained flat, as owners prioritised market share through competitive pricing. Older warehouses offered incentives such as longer rent-free periods and added services to retain tenants amid stable leasing conditions.
• Owner-occupiers dominated market activity, with capital values and yields remaining stable. Limited prime assets, flight to quality and low transaction volumes continued to reinforce pricing and yield stability.

Outlook: Market stability persists with prudent leasing and investment decisions

• Market leasing activity is expected to improve modestly over the coming quarters, though uncertainty is likely to cause occupiers to delay major decisions, particularly for large-scale transactions.
• Investment activity is expected to continue to be led by local owner-occupiers over the next 12 months, as the limited supply of prime, investment-grade assets continues to constrain foreign and institutional investor participation.