Rents and occupancy rates of the overall industrial property market continued to stabilise in the first quarter of 2019 while prices saw minor declines.

Rents and occupancy

The All-Industrial rental index continued the stabilisation trend from the previous quarter and remained unchanged QOQ. This confirms that the market might already have found the bottom, putting the All-Industrial rental index at 13.7% below the peak in Q2 2014. Overall occupancy rate also remained unchanged QOQ in Q1 2019 at 89.3%, the highest All-Industrial occupancy level since Q1 2017.

Warehouse rents improved from the previous quarter, inching up by 0.1% QOQ in Q1 2019 - this is the first rental uptick in 16 quarters. Anecdotally, we note that there has been significant improvement in demand compared to six months ago. However, occupancy rate decreased by 0.3 percentage point (pp) QOQ to 89.2%, as demand still lagged the high amount of new supply totaling more than one million sq ft (net) that came during Q1.

Business parks saw the best performance among all segments in Q1, with rents rising by 0.9% QOQ and occupancy rate increasing by 0.7pp QOQ to 85.6%, led by the East (Changi Business Park, Viva Business Park) and Central (one north, Mapletree Business City) planning regions. Net demand for business park space outpaced net supply in Q1 as tenants continued to compete for newer business park buildings in good locations amidst a lack of premium stock in the overall market.

Rents for multiple-user factory continued to dip for the third consecutive quarter, falling by 0.1% QOQ in Q1 2019, mainly dragged by the Central and the North-East regions. Overall occupancy rate also declined by 0.3pp QOQ to 86.3% for multiple-user factory in Q1.

Similarly, rents for single-user factory also dropped by 0.6% QOQ in Q1. However, overall occupancy rate for single-user factory improved by 0.3pp QOQ to 89.2% as most of the supply had been pre-committed, resulting in a high demand level in Q1 at 1.9 million sq ft (net).


The All-Industrial price index slipped by 0.1% QOQ in the first quarter of 2019, with price index for single-user factory remaining unchanged from Q4 2018 and multiple-user factory dropping by 0.2% QOQ.

Future supply

The total industrial stock completion in Q1 2019 more than tripled over the previous quarter to 3.5 million sq ft (net). JTC expects another 13.3 million sq ft (gross) of industrial space, with 80.7% of that single-user factories, to come on-stream for the rest of 2019. Assuming 80-90% efficiency, the new supply would roughly work out to be 11-12 million sq ft of net floor area, bringing total completed industrial space in 2019 to around 15 million sq ft (net), an increase of more than 2.5 times from 2018. Some projects previously expected to be delivered in late-2019 have been pushed back, further increasing the supply pipeline afterwards. New supply is set to further intensify in 2020 to 17.4 million sq ft (gross) of industrial space across all types before easing from 2021 onwards.


According to advanced estimates from Ministry of Trade and Industry (MTI), Singapore’s GDP growth slowed to 1.3% YOY in Q1 2019 from 1.9% in Q4 2018, mainly weighed down by the manufacturing sector which contracted by 1.9% YOY in Q1. Oxford Economics forecasts GDP to grow by 2.3% in 2019, slightly down from 3.2% in 2018, on the back of a slowdown in global trade landscape and weaker Chinese import demand.


We think the market statistics in Q1 2019 are evidence that industrial rents in general have bottomed but a significant rental recovery may be premature. New business park properties and high-spec spaces should continue to enjoy rental improvements due to limited stock and tighter new supply. Business parks may also benefit from potential decentralisation of qualifying businesses, driven by the recent URA Draft Master Plan's incentive schemes to promote more mixed developments within the central business district (CBD), and as CBD prime office and business parks’ rental differential continue to widen.

Warehouse supply is expected to slow down over the rest of 2019 to 1.6 million sq ft (gross, equivalent to 1.4% of current stock). However, with warehouse vacancy rate remaining high after the increase to 10.8% in Q1, we anticipate logistics rents to remain soft for the rest of this year.