High-specs industrial monthly rents also experienced a 5.9%
decline in 2014, falling from $2.55 per sq ft ($27 per sqm)
in 2013 to $2.40 per sq ft ($26 per sqm). While demand in
the high-specs industrial segment was relatively healthy, it is
likely that landlords of these properties kept their rentals at
attractive levels to entice tenants, particularly those relocating
from office premises in the fringe and decentralised areas.
Nonetheless, rentals of better quality high-specs industrial
developments remained stable in 2014.
Outlook
The prospects for manufacturing sector is relatively subdued,
with a net weighted balance of 3% of manufacturers expecting
a more challenging business situation in H1 2015 due to the
mixed global economic outlook. While the PurchasingManagers’
Index picked up by 0.3 points from 49.6 in December 2014
to 49.9 in January 2015, it is below the 50-point mark that
separates contraction and expansion. Meanwhile, the Economic
Development Board (“EDB”) expects the level of investment
commitments to moderate in line with Singapore’s restructuring
and increased global economic uncertainty. Coupled with
the supply pressure in the multiple-user factory market, light
industrial rentals are expected to be under pressure and are
forecast to decline by 3% to 5% in 2015.
On the other hand, the outlook for high-specs industrial space
is more positive, given the limited new supply of such space
over the next few years. In addition, high-specs industrial are
traditionally correlated with office rents, given their value
proposition as a more affordable alternative for qualifying
tenants. High-specs industrial rentals are expected to grow by
about 3% to 5% in 2015, on the back of an expected rise in
office rents.
5.0 LOGISTICS AND DISTRIBUTION CENTRES
19
Existing Stock
Similar to light industrial, private warehouse stock rose by
8.8% from 7.6 million sqm in 2013 to 8.3 million sqm in 2014,
which translated to a net supply of 674,000 sqm. This was more
than double of that in 2013 (315,000 sqm) and the highest in
the past decade. Many of the warehouses completed in 2014
were BTS logistics facilities by third-party logistics companies
as well as industrialists in specialised logistics sectors e.g.,
chemicals and perishables. The completions in 2014 were
generally better specified than conventional warehouses.
These include Cogent 1.Logistics Hub (130,100 sqm) and
Fairprice Hub (91,300 sqm). A notable completion in 2014
was BIGBOX, the last warehouse retail development under the
EDB’s Warehouse Retail Scheme introduced in 2004.
Potential Supply
About 1.1 million sqm of private warehouse space is in the
pipeline from 2015 to 2017. Although lower than that in
2014, new supply in 2015 (0.4 million sqm, 41%) and 2016
(0.5 million sqm, 49%) is well above the average annual new
supply from 2005 to 2014 (0.3 million sqm).
Many of the warehouses in the pipeline are BTS facilities,
predominantly occupied by a single-user e.g., DHL Supply
Chain Regional Center (86,200 sqm) at Greenwich Drive and
the warehouse development by Warehouse Logistics Net Asia
at Jalan Buroh (49,200 sqm). As such, the ample pipeline
supply is not expected to impact the warehousing market
significantly.
Demand and Occupancy
Net demand for private warehouse space was 698,000 sqm
in 2014, the highest over the past decade and even exceeded
the significant net supply in the year (Figure 5.1). This was in
line with a study
20
of top 1,000 companies in Singapore, which
indicated that the transport & storage sector, a key demand
driver of the logistics and distribution segment, was the top
performing industry in Singapore in 2014. Due to net demand
exceeding supply in 2014, occupancy for private warehouse
space rose by 1.0%-points from 90.8% in Q4 2013 to 91.8%
in Q4 2014.
Figure 5.1: Net Supply, Net Demand and Occupancy
(Private Warehouse Space)
Source: JTC, DTZ Consulting & Research, March 2015
800,000
96%
700,000
600,000
94%
500,000
92%
400,000
90%
300,000
88%
200,000
86%
100,000
84%
0
82%
sqm
2004
2008
2006
2010
2012
2005
2009
2007
2011
2013
2015F
2014
2016F
2017F
Average Annual Demand (2004 to 2013): 218,900 sqm
Average Annual Net Supply (2004 to 2013): 205,700 sqm
Average Annual
Completions
(2015 to 2018):
353,200 sqm
Net Supply (LHS)
Demand (LHS)
Occupancy (RHS)
19 There are no official statistics on logistics and distribution centres in Singapore. The report primarily uses private warehouse data from JTC.
20 Source: DP Information Group and Ernst & Young.
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