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19-08-14, 19:27
http://www.straitstimes.com/archive/thursday/premium/money/story/industrial-site-rentals-plateau-20140703
Industrial site rentals plateau
New business parks and high-tech sites still hot
Published on Jul 3, 2014 1:10 AM
By Melissa Tan
DOWNBEAT growth prospects and a faltering manufacturing sector have hit demand for factories and warehouses although interest for newer business parks and high-tech industrial space remains keen, said consultant DTZ yesterday.
Both rents and prices for conventional industrial sites remained unchanged in the second quarter compared to the previous three months, based on a basket of properties that DTZ tracked.
It found that the average rent for ground-floor space was $2.20 per sq ft (psf) per month in April through June, while rent for upper storeys was $1.80 psf per month on average.
The price of ground-floor space also held steady at $627 psf in the period, while that of upper-storey space was $470 psf.
Ms Lee Lay Keng, DTZ's Southeast Asia research head, said the recent completion of several multi-user factories had "crowded the market, creating competition among landlords".
These include Primz Bizhub in Woodlands, Eldix in Mandai and Pixel Red in Tai Seng.
"Some of the newer developments also lack the building specifications necessary for industrial use, such as optimum unit sizes, ceiling height or loading capacity," she said.
Supply has become so abundant that the islandwide occupancy rate for multi-user factories fell to 87 per cent in the first three months this year - the lowest level since the third quarter of 2010, DTZ noted.
Major multi-user industrial developments that are expected to be completed by the end of this year include Premier @ Kaki Bukit, Synergy@KB also at Kaki Bukit and Link@AMK in Ang Mo Kio.
However, the picture was slightly different for business parks and high-tech industrial space, where rents have risen overall due to solid demand.
Business park rents climbed 2.5 per cent to $4.90 psf per month in the second quarter compared to the first, while rent for high-tech industrial space grew 1.6 per cent to $3.20 psf.
Increasing rents in the office sector have driven some "cost-conscious" office tenants to relocate to business parks or high-tech industrial space, which could help them save as much as 30 to 60 per cent, said the consultant.
Roche Diagnostics and Intel are making just such a move. Both are heading to the recently completed Aperia development in Kallang: Roche from Central Plaza and Intel from Haw Par Centre.
Ms Cheng Siow Ying, executive director of business space at DTZ, said rents have grown particularly for "newer and good quality" business parks and high-tech industrial buildings such as those at one-north in Buona Vista, Mapletree Business City in Pasir Panjang, 988 Toa Payoh and Aperia.
But older developments are experiencing a slower pace in take-up, she said, noting: "This has widened the rental gap between the newer and older buildings, creating a two-tier market for business parks and high-tech developments."
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Industrial site rentals plateau
New business parks and high-tech sites still hot
Published on Jul 3, 2014 1:10 AM
By Melissa Tan
DOWNBEAT growth prospects and a faltering manufacturing sector have hit demand for factories and warehouses although interest for newer business parks and high-tech industrial space remains keen, said consultant DTZ yesterday.
Both rents and prices for conventional industrial sites remained unchanged in the second quarter compared to the previous three months, based on a basket of properties that DTZ tracked.
It found that the average rent for ground-floor space was $2.20 per sq ft (psf) per month in April through June, while rent for upper storeys was $1.80 psf per month on average.
The price of ground-floor space also held steady at $627 psf in the period, while that of upper-storey space was $470 psf.
Ms Lee Lay Keng, DTZ's Southeast Asia research head, said the recent completion of several multi-user factories had "crowded the market, creating competition among landlords".
These include Primz Bizhub in Woodlands, Eldix in Mandai and Pixel Red in Tai Seng.
"Some of the newer developments also lack the building specifications necessary for industrial use, such as optimum unit sizes, ceiling height or loading capacity," she said.
Supply has become so abundant that the islandwide occupancy rate for multi-user factories fell to 87 per cent in the first three months this year - the lowest level since the third quarter of 2010, DTZ noted.
Major multi-user industrial developments that are expected to be completed by the end of this year include Premier @ Kaki Bukit, Synergy@KB also at Kaki Bukit and Link@AMK in Ang Mo Kio.
However, the picture was slightly different for business parks and high-tech industrial space, where rents have risen overall due to solid demand.
Business park rents climbed 2.5 per cent to $4.90 psf per month in the second quarter compared to the first, while rent for high-tech industrial space grew 1.6 per cent to $3.20 psf.
Increasing rents in the office sector have driven some "cost-conscious" office tenants to relocate to business parks or high-tech industrial space, which could help them save as much as 30 to 60 per cent, said the consultant.
Roche Diagnostics and Intel are making just such a move. Both are heading to the recently completed Aperia development in Kallang: Roche from Central Plaza and Intel from Haw Par Centre.
Ms Cheng Siow Ying, executive director of business space at DTZ, said rents have grown particularly for "newer and good quality" business parks and high-tech industrial buildings such as those at one-north in Buona Vista, Mapletree Business City in Pasir Panjang, 988 Toa Payoh and Aperia.
But older developments are experiencing a slower pace in take-up, she said, noting: "This has widened the rental gap between the newer and older buildings, creating a two-tier market for business parks and high-tech developments."
[email protected]