Figure 2.2: URA Rental Trend (Private Business Parks)
INDEPENDENT MARKET STUDY BY DTZ
S I N G A P O R E
Outlook
The impetus for occupiers who qualify to move to business
parks may weaken in the short term, given the short-term office
oversupply. Average annual completion of office space between
2016 and 2020 (152,400 sq m) is significantly higher than
historical demand between 2006 and 2015 (67,600 sq m), and is
expected to add downward pressure in the office rental market.
With subdued business confidence and softening of office rents
in 2016, rents of business parks are expected to ease by 4% to
6% over the same period. Notwithstanding, with competitive
rentals, business parks with good building specifications
are expected to retain occupiers with qualifying activities.
Business park space will continue to attract companies which
adopt medium-to-longer term strategies to manage the level
and volatility of their accommodation costs.
3.0 Light
7
and High-Specs
8
Industrial
Existing Supply
Light industrial stock (single and multiple-user factory,
excluding high-specs industrial) grew at 2.9% (769,000 sq
m), from 26.3 million sq m in 2014 to 27.1 million sq m in
2015. Major completions include Eco-Tech @ Sunview at
Sunview Road (57,700 sq m), Mandai Connection at Mandai
Link (45,800 sq m), Bukit Batok Connection at Bukit Batok
Avenue 6 (30,800 sq m), North View Bizhub at Yishun Ave 9
(24,100 sq ft) and TAG A at Tagore Lane (15,200 sq m).
Meanwhile, DTZ estimates that high-specs industrial stock
in Singapore rose by about 8.7% (140,000 sq m), from about
1.6 million sq m in 2014 to 1.7 million sq m in 2015. Notable
high-specs completions include 10 Tukang Innovation Drive
(20,300 sq m) and CT Hub 2 (29,300 sq m) at Lavender Street.
Another significant completion was Equinix SG3 IBX Data
Centre (29,300 sq m) at one-north, which will be Equinix’s
third data centre in Singapore and its largest in Asia Pacific.
Potential Supply
DTZ estimates that there is approximately 1.9 million sq m
of private factory space in the pipeline from 2016 to 2018.
Annual expected completion averages at 617,600 sq m,
significantly lower than the average annual supply in the
past decade (870,000 sq m). There are two types of private
factory space - single and multiple-user factory space. Most
(89%; 641,000 sq m) of the multiple-user factories in the
pipeline are strata-titled for sale, with some units less than
500 sq m in size.
Approximately 14% of overall potential supply for private
factory space between 2016 and 2018 are high-specs
industrial developments. Many of the high-specs industrial
developments are data centres. These include DC West
(43,300 sq m) and BTS-Hewlett Packard phases 1 and 2
(62,800 sq m), which are expected to complete in 2016, and
Telin-3 (16,400 sq m), scheduled to complete in 2018.
Demand and Occupancy
9
Demand for private factory space increased by 16% YOY
(99,000 sq m), from 618,000 sq m in 2014 to 717,000 sq m
in 2015 (Figure 3.1). Net supply for private factory space
moderated to 909,000 sq m in 2015, 15% lower than the
1,064,000 sq m in 2014. However, net supply continues to
exceed demand in 2015.
On the back of further reduction in output arising from a
sluggish manufacturing sector, occupancy rate of single-
user factory dipped by 0.6%-points to 91.9% as at Q4 2015.
While occupancy rate for multiple-user factory inched up by
0.3% to 86.3% in 2015, the growth in occupancy was limited.
The weak oil and gas industry contributed to a 3.1%-points
fall in occupancy rates for multiple-user factories in the West
Region, where many oil and gas companies are located, to
87.1% in Q4 2015.
7 Light industrial refers to all single-user and multiple-user factory space, excluding high-specs industrial, as defined by DTZ.
8 There is currently no official definition for high-specs industrial space. According to A-REIT, they are typically vertical corporate campuses with high office
content combined with high specifications mixed-use industrial space. These type of properties house largely MNCs which wish to co-locate their manufacturing
activities with their HQ operations functions. These also include data centres.
9 Demand and occupancy data for the high-spec and light industrial segments is unavailable. The demand and occupancy trends for private multiple-user factory
are used as a proxy.
1.00
1.50
2.00
2.50
3.50
4.50
4.00
$ per sq ft per month
3.00
Median Rent
2008
2006
2010
2012
2009
2007
2011
2013
2015
2014
Source: JTC, Urban Redevelopment Authority (URA), DTZ Consulting & Research,
March 2016
.78
A-REIT ANNUAL REPORT
2015/2016
