Rents
According to JTC’s warehouse rental index, warehouse rentals
fell by 6.3% in 2014, which was more extensive compared
with the multiple-user factory segment (-0.7%) (Figure 5.2).
This was despite the robust demand and pick-up in occupancy
in the warehouse segment in 2014. While the decline was
partly due to the high rental base achieved in 2013, the tighter
restrictions on industrial space usage in the recent years, e.g.,
JTC’s subletting policy revision, also weighed down on the
warehouse market.
In addition, many older warehouses, which are not suited for
modern logistics and distribution operations, are captured
in the rental index and may have put a drag on warehouse
rentals. Meanwhile, median warehouse monthly rents were
$2.00 per sq ft ($22 per sqm) in 2014, while 75th percentile
warehouse monthly rents, a proxy for logistics and distribution
facilities, were $2.51 per sq ft ($27 per sqm).
Figure 5.2: Rental Trend (Private Warehouse Space)
Source: JTC, DTZ Consulting & Research, March 2015
Outlook
Similar with light industrial, the rental outlook for private
warehouse space is expected to be cautious. Private
warehouse rents are expected to decline by about 3% to 5%
in 2015. Nonetheless, the prospects for facilities geared for
logistics and distribution functions are expected to be more
positive, given the rapid growth of e-commerce, particularly
in Asia Pacific. According to Rakuten, global e-commerce sales
are expected to reach USD1.5 (SGD2.1) trillion by the end of
2015, and Asia Pacific will become the largest market (sales
of USD525.2 (SGD726.3) billion), surpassing that for North
America (USD482.6 (SGD667.4) billion).
In particular, Singapore continues to position itself as a
strategic logistics hub in Asia Pacific for regional distribution
services and has cultured a conducive environment for high-
value logistics and distribution activities. Moreover, as most
of the expected warehouse completions in the next two years
are BTS warehousing/ logistics facilities, supply pressure on
rentals is expected to be relatively moderate.
Taking the abovementioned factors into consideration, rentals
for logistics and distribution facilities are expected to perform
better than those for conventional warehouses in 2015.
I N D E P E N D E N T M A R K E T S T U D Y ( S I N G A P O R E )
By DTZ Debenham Tie Leung (SEA) Pte Ltd
120
80
2.40
40
2.00
100
60
2.20
20
1.80
1.60
1.40
1.20
0
1.00
$ per sq ft per month
Index (Base – Q4 2012)
2004
2008
2006
2010
2012
2005
2009
2007
2011
2013
2014
Median Warehouse Rents (LHS)
75th Percentile Warehouse Rents (LHS)
Rental Index (RHS)
2.60
ASCENDAS REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2014/15
