Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers

According to Colliers, the source of commercial sector is expected to expand this year, with over 2.5 times the supply in 2024 coming on stream prior to reducing from 2026 onwards. “This surge in supply has actually caused today supply-demand inequality with sectors of the market now viewing upcoming supply with slower precommitments or completed projects with lower tenancy,” the report states.

The price index additionally increased 0.5% q-o-q in 4Q2024, alleviating from the 1.2% growth in the last quarter. Last year, industrial real estate costs rose 2.1%, even less than half of the 5.1% increase documented the year prior to.

Furthermore, increased trade protectionism has brought skepticism right into worldwide markets, possibly influencing company confidence and financial investment choices.

The higher supply, combined with boosted caution amongst occupiers due to constantly high interest rates and escalating operating budget, is expected to proceed dampening rental improvement.

Industrial property rates and rental fees in Singapore are expected to tone down this year amid greater supply and weaker demand, according to a February study record by Colliers. The firm is predicting both overall yearly industrial leasing and cost buildup to moderate to in between 0% to 2% in 2025, contrasted to the 3.5% increase chalked up for both last year.

8@BT Singapore

The soft overview enters as JTC’s 4Q2024 information suggested a market that is “slowing”, states Colliers. The JTC All Industrial rental index charted a 17th successive quarter of development in 4Q2024, climbing 0.5% q-o-q and bringing overall development for the year to 3.5%. Nonetheless, this notes a significant decrease from the 8.9% rental development visited 2023.

On the flip side, Colliers prepares for industrial demand to continue to be supported by the semiconductors, logistics and advanced production industries. It also anticipates industrial leasing activities to see a progressive ramp-up in time as plans come to be clearer and market sentiments enhance, underpinned by the recurring recuperation in the chip cycle.

In the meantime, given the bump in supply and the forecasted moderation in rental fees, this might be a good year for renters with even more options concerning market, states Colliers. “New industrial growths, outfitted with more modern specifications, can encourage much more companies to move from older, ageing manufacturing sectors to newer projects,” claims Nicolas Menville, executive manager and head of Singapore-based industrial customers for Colliers.


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