APPD Market Report Article
SingaporeSeptember 21, 2022
Doreen Goh, Director - Research, Singapore
Demand stays healthy in 2Q22
- Third-party logistics players (3PLs) with expansion needs, end-users from a broad base of industries as well as firms in the e-commerce and cold storage businesses continue to underpin logistics/warehouse demand in 2Q22. In addition, several new-to-Singapore companies as well as those with an office presence are looking to set up regional distribution centres.
- Reflecting healthy demand, landlords of recently completed and upcoming multi-tenanted developments reported high commitment and pre-commitment levels, respectively. However, this has compounded the challenge of meeting large space requirements of 100,000 sq ft and above.
Supply rises on completion of major projects
- Major 2Q22 completions include LOGOS Penjuru Logistics Centre and the partial completion of LOGOS Tuas Logistics Hub (Phase 1).
- A new project announced during the quarter involved POKKA’s sale-and-leaseback deal with ESR and PGIM Real Estate for the redevelopment of its single-storey factory and warehouse at 4 Benoi Crescent into a new five-storey ramp-up warehouse by 2024.
Rent growth accelerates in 2Q22
- Continued stiff competition for space, especially for better quality premises, pushed up the average islandwide logistics/warehouse rent for the fifth straight quarter. Rent growth also accelerated in 2Q22 to record its fastest quarterly rise since trending up in 2Q21.
- Investors and end-users were still on the lookout for suitable logistics/warehouse acquisition opportunities in 2Q22. Major transactions included two freehold warehouses at 42 Tagore Lane (SGD 8.80 million) and 444 Tagore Industrial Avenue (SGD 8.89 million).
Outlook: Rent and price growth may slow down
- Notwithstanding the more challenging economic outlook, rents are expected to stay on an uptrend as available space options, especially for quality warehouse premises, are likely to remain limited in the near term. However, rent growth could slow down as occupiers may become more cautious.
- Logistics/warehouse assets are expected to stay on the radar of investors and end-users. However, the faster-than-expected rise in interest rates and elevated macroeconomic headwinds could slow the pace of price growth in the coming quarters.