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02-05-14, 22:29
http://www.businesstimes.com.sg/archive/friday/premium/top-stories/composition-industrial-space-counts-consultants-20140425
Published April 25, 2014
BUSINESS SPACE
Composition of industrial space counts: consultants
Expected supply coming on-stream is double that of annual demand
By Mindy Tan
[email protected] @MindyTanBT
[SINGAPORE] The amount of industrial space expected to come on-stream is double that of annual average demand. But while this supply is broadly welcome, more can be done to re-align this with what business needs, consultants said.
According to JTC Corp's figures, an average of 2.1 million square metres (sq m) of industrial space is expected to hit the market annually over the next three years. Of this, about 28 per cent is multiple-user factory space. The remaining space is mainly single-user factory space (37 per cent) and warehouse space (25 per cent). Some business park space will also be built over the next three years.
But consultants warn that this could result in a supply glut, and instead call for a more targeted approach.
"In effect, there is no real shortage," said Chia Siew Chuin, research director at Colliers Singapore. "Any shortage could just be perceived, as small and medium-sized enterprises (SMEs) have provided feedback to the government that there is a 'shortage' of suitable/affordable industrial space for them."
But increasing the supply - especially if the additional space is not useful for modern industrialists, many of which are SMEs - is not the answer. Instead, the government should realign how industrial space is used to include more companies that are involved in manufacturing, said Ms Chia.
"As the state of the manufacturing landscape changes, the government's planning and land use definitions of what is considered suitable and allowable in industrial premises need to reflect uses that are traditionally not industrial activities, but, nonetheless contribute to some stage of a product's life cycle in today's technology-based platforms," she said.
But while the government is open to "refining" what activities can go into the approved uses of different industrial facilities, redefinition is not on the cards.
"We look at (industrial definitions) continuously," said Png Cheong Boon, chief executive officer of JTC Corp. "But if the new industry's facilities can fit into B1 or B2, I think we would be hesitant to change (these definitions) because once we change it there are significant implications in terms of land values, etc. What's more important is to make sure we continue to refine what activities can go into B1 and B2 rather than trying to change the zoning."
Kurt Wee, president of the Association of Small and Medium Enterprises (ASME), welcomed the news that there would be more industrial space, even though he noted that of the three real estate spectrums - industrial space, office space, and retail and F&B space - industrial was one of the less problematic areas for businesses.
"This is very welcome but what we need is a kind of framework that helps to regulate rent increases at sustainable levels. In any business, when your rent goes up by 50-100 per cent, it's just not something that is acceptable," said Mr Wee.
According to Nicholas Mak, head of research at SLP International, while there is some shortage in the market, it is predominantly in niche areas, such as food factories, strata-titled warehouse space, factory units for chemical processing, and strata-titled factories with ancillary dormitories for workers.
"The government needs a 'rifle' approach to solve the current problem, not a 'shotgun' approach," he said.
Published April 25, 2014
BUSINESS SPACE
Composition of industrial space counts: consultants
Expected supply coming on-stream is double that of annual demand
By Mindy Tan
[email protected] @MindyTanBT
[SINGAPORE] The amount of industrial space expected to come on-stream is double that of annual average demand. But while this supply is broadly welcome, more can be done to re-align this with what business needs, consultants said.
According to JTC Corp's figures, an average of 2.1 million square metres (sq m) of industrial space is expected to hit the market annually over the next three years. Of this, about 28 per cent is multiple-user factory space. The remaining space is mainly single-user factory space (37 per cent) and warehouse space (25 per cent). Some business park space will also be built over the next three years.
But consultants warn that this could result in a supply glut, and instead call for a more targeted approach.
"In effect, there is no real shortage," said Chia Siew Chuin, research director at Colliers Singapore. "Any shortage could just be perceived, as small and medium-sized enterprises (SMEs) have provided feedback to the government that there is a 'shortage' of suitable/affordable industrial space for them."
But increasing the supply - especially if the additional space is not useful for modern industrialists, many of which are SMEs - is not the answer. Instead, the government should realign how industrial space is used to include more companies that are involved in manufacturing, said Ms Chia.
"As the state of the manufacturing landscape changes, the government's planning and land use definitions of what is considered suitable and allowable in industrial premises need to reflect uses that are traditionally not industrial activities, but, nonetheless contribute to some stage of a product's life cycle in today's technology-based platforms," she said.
But while the government is open to "refining" what activities can go into the approved uses of different industrial facilities, redefinition is not on the cards.
"We look at (industrial definitions) continuously," said Png Cheong Boon, chief executive officer of JTC Corp. "But if the new industry's facilities can fit into B1 or B2, I think we would be hesitant to change (these definitions) because once we change it there are significant implications in terms of land values, etc. What's more important is to make sure we continue to refine what activities can go into B1 and B2 rather than trying to change the zoning."
Kurt Wee, president of the Association of Small and Medium Enterprises (ASME), welcomed the news that there would be more industrial space, even though he noted that of the three real estate spectrums - industrial space, office space, and retail and F&B space - industrial was one of the less problematic areas for businesses.
"This is very welcome but what we need is a kind of framework that helps to regulate rent increases at sustainable levels. In any business, when your rent goes up by 50-100 per cent, it's just not something that is acceptable," said Mr Wee.
According to Nicholas Mak, head of research at SLP International, while there is some shortage in the market, it is predominantly in niche areas, such as food factories, strata-titled warehouse space, factory units for chemical processing, and strata-titled factories with ancillary dormitories for workers.
"The government needs a 'rifle' approach to solve the current problem, not a 'shotgun' approach," he said.