Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
The price index also grew 0.5% q-o-q in 4Q2024, easing from the 1.2% growth in the previous quarter. Last year, industrial property rates rose 2.1%, even less than half of the 5.1% rise recorded the year before.
The low-key outlook happens as JTC’s 4Q2024 data indicated a market place that is “slowing”, states Colliers. The JTC All Industrial rental index charted a 17th constant quarter of expansion in 4Q2024, increasing 0.5% q-o-q and bringing overall progress for the year to 3.5%. Nonetheless, this notes a substantial decrease from the 8.9% rental development visited 2023.
In the meantime, provided the bump in supply and the predicted balance in leas, this might be a good year for lessees with even more choices pertaining to market, states Colliers. “New industrial growths, geared up with more modern requirements, can encourage a lot more firms to relocate from older, ageing manufacturing offices to more recent ventures,” states Nicolas Menville, executive manager and head of Singapore-based industrial customers for Colliers.
In addition, heightened trade protectionism has brought uncertainty into global markets, possibly influencing organization confidence and financial investment decisions.
On the flip side, Colliers prepares for industrial demand to continue to be supported by the semiconductors, logistics and advanced manufacturing industries. It even anticipates industrial leasing actions to see a gradual ramp-up over time as policies come to be clearer and market sentiments strengthen, underpinned by the continuous recovery in the chip cycle.
The greater supply, integrated with raised caution amongst occupiers due to persistently high interest rates and elevating operating expenses, is anticipated to continue dampening rental increase.
According to Colliers, the source of industrial sector is expected to expand this year, with over 2.5 times the supply in 2024 coming on stream before tapering off from 2026 onwards. “This rise in supply has actually caused today supply-demand inequality with segments of the marketplace currently seeing upcoming supply with slower precommitments or completed projects with reduced occupancy,” the file states.
Industrial property prices and leas in Singapore are assumed to regulate this year amidst greater supply and weaker demand, according to a February research record by Colliers. The firm is predicting both total yearly commercial rental and price growth to moderate to between 0% to 2% in 2025, compared to the 3.5% growth chalked up for both last year.
