reporter2
04-07-14, 13:13
http://www.businesstimes.com.sg/archive/saturday/specials/property/demand-strata-titled-industrial-market-slows-20140703
Published July 03, 2014
Demand in strata-titled industrial market slows
By sheena tan
[email protected]
ACTIVITY in the strata-titled industrial market has gone down significantly, with demand coming mostly from end-users, said property consultancy DTZ Research.
All in all, 224 strata-titled factory units changed hands in Q2, said DTZ, which based its data on caveats downloaded from the URA Realis tool. This brought total transactions in the first half of this year to 523 - 57 per cent fewer than in the corresponding period last year.
Average capital values and rents for conventional industrial space (that is, traditional factories) held steady, based on a basket of private sector-owned properties DTZ tracks.
Conventional industrial average capital values for first-storey spaces in Q2 were flat at $627 per sq ft; those for upper-storey spaces were $470 per sq ft.
While limited supply of freehold and longer-tenure properties kept prices for such spaces firm, prices of industrial properties with shorter tenures - those with 30 years or less left on the lease - started to decline. This was a result of the difficulty in moving units which have shorter lifespans and higher financing costs, making them generally less appealing.
Second-quarter monthly rents for first-storey conventional industrial spaces held firm from the previous quarter at $2.20 per sq ft; Q2 monthly rents for upper-storey spaces were going at $1.80 per sq ft. Despite the large supply, take-up rates were slower in Q2.
Completion of several multi-user factories in the past few quarters created competition among landlords, said DTZ's regional head of research (Southeast Asia) Lee Lay Keng. She added that the ample supply meant that businesses need not commit as quickly and can take the time to find suitable spaces.
She also noted that some newer developments lacked specifications such as ceiling height for industrial use. This, along with occupiers being cost-conscious and other factors such as strict user-eligibility criteria and slower manufacturing activity, affected take-up rates.
Rents in the business park and high-tech space, however, inched up, supported by leasing queries for newer and well-located developments. Landlords had some power to raise monthly rents. Rents for business parks in Q2 were $4.90 per sq ft, and those for high-tech spaces $3.20 per sq ft, up from $4.78 and $3.15 per sq ft respectively in Q1.
Older developments have seen activity slowing. The rental gap between newer and older buildings has widened, creating a two-tier market for business parks and high-tech developments, said DTZ's executive director of business space, Cheng Siow Ying.
Rising office rents have also driven cost-conscious office tenants to the business park and high-tech space, where rents can be 30 to 60 per cent lower than average office rents in the CBD (central business district) fringe and decentralised areas. Businesses making this shift are Roche Diagnostics and Intel.
The full research report is available on BTInvest (http://www.btinvest.com.sg/property/).
Published July 03, 2014
Demand in strata-titled industrial market slows
By sheena tan
[email protected]
ACTIVITY in the strata-titled industrial market has gone down significantly, with demand coming mostly from end-users, said property consultancy DTZ Research.
All in all, 224 strata-titled factory units changed hands in Q2, said DTZ, which based its data on caveats downloaded from the URA Realis tool. This brought total transactions in the first half of this year to 523 - 57 per cent fewer than in the corresponding period last year.
Average capital values and rents for conventional industrial space (that is, traditional factories) held steady, based on a basket of private sector-owned properties DTZ tracks.
Conventional industrial average capital values for first-storey spaces in Q2 were flat at $627 per sq ft; those for upper-storey spaces were $470 per sq ft.
While limited supply of freehold and longer-tenure properties kept prices for such spaces firm, prices of industrial properties with shorter tenures - those with 30 years or less left on the lease - started to decline. This was a result of the difficulty in moving units which have shorter lifespans and higher financing costs, making them generally less appealing.
Second-quarter monthly rents for first-storey conventional industrial spaces held firm from the previous quarter at $2.20 per sq ft; Q2 monthly rents for upper-storey spaces were going at $1.80 per sq ft. Despite the large supply, take-up rates were slower in Q2.
Completion of several multi-user factories in the past few quarters created competition among landlords, said DTZ's regional head of research (Southeast Asia) Lee Lay Keng. She added that the ample supply meant that businesses need not commit as quickly and can take the time to find suitable spaces.
She also noted that some newer developments lacked specifications such as ceiling height for industrial use. This, along with occupiers being cost-conscious and other factors such as strict user-eligibility criteria and slower manufacturing activity, affected take-up rates.
Rents in the business park and high-tech space, however, inched up, supported by leasing queries for newer and well-located developments. Landlords had some power to raise monthly rents. Rents for business parks in Q2 were $4.90 per sq ft, and those for high-tech spaces $3.20 per sq ft, up from $4.78 and $3.15 per sq ft respectively in Q1.
Older developments have seen activity slowing. The rental gap between newer and older buildings has widened, creating a two-tier market for business parks and high-tech developments, said DTZ's executive director of business space, Cheng Siow Ying.
Rising office rents have also driven cost-conscious office tenants to the business park and high-tech space, where rents can be 30 to 60 per cent lower than average office rents in the CBD (central business district) fringe and decentralised areas. Businesses making this shift are Roche Diagnostics and Intel.
The full research report is available on BTInvest (http://www.btinvest.com.sg/property/).