End-users and 3PLs driving demand

• Demand for logistics/warehouse space stayed firm in 4Q22, underpinned by end-users and third-party logistics players (3PLs) with expansion needs. There were also some enquiries for temperature-controlled premises.
• Leasing activity was dominated by renewals given limited space availability in the market, especially for premises sized 100,000 sq ft and above.

New completions rise but space options stay limited

• Major completions in 4Q22 included the warehouse components of both Tee Yih Jia Food Hub and OJJ Foods’ facility at 23 Chin Bee Avenue, the second phase of LOGOS Tuas Logistics Hub and a single-user warehouse development at 78 Senoko Drive.
• Recently completed or upcoming multi-tenanted logistics/warehouse developments in 2023 are either fully committed or more than 85% taken.

Rents and capital values rising unabatedly

• The space crunch and firm demand, especially for quality logistics/warehouse premises, drove the average islandwide logistics/warehouse rent up for the seventh consecutive quarter in 4Q22. This, in turn, underpinned capital value growth.
• Enterprise Logistics Centre, a two-storey ramp-up warehouse with mezzanine office space, was reportedly sold by Far East Organization to a Singapore unit of Hong Kong-based Intex Development Company Limited for SGD 120.60 million. Separately, Mapletree Logistics Trust divested its cargo lift warehouse at 3 Changi South Lane to Nova Furnishing Holdings Pte Ltd for SGD 22.00 million.

Outlook: Rents and capital value growth expected to slow

• Demand for quality logistics/warehouse space is expected to continue outstripping supply, and underpin rent growth in 2023. However, a more modest pace of growth is anticipated as some occupier resistance towards further rent hikes is likely, given the challenging macroeconomic outlook.
• While logistics/warehouse assets are expected to remain a sought-after asset class among investors in 2023, a slower pace of capital value growth is anticipated in the rising interest rate environment.