Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
According to Colliers, the source of industrial space is expected to grow this year, with over 2.5 times the supply in 2024 coming on stream before lessening from 2026 onwards. “This surge in supply has actually caused the present supply-demand discrepancy with sectors of the marketplace currently seeing upcoming supply with slower precommitments or completed ventures with reduced tenancy,” the report states.
The greater supply, incorporated with enhanced caution amongst occupants due to constantly high rate of interest and rising business expenses, is expected to proceed dampening rental improvement.
The low-key overview enters as JTC’s 4Q2024 information suggested a market place that is “slowing”, states Colliers. The JTC All Industrial rental index charted a 17th successive quarter of expansion in 4Q2024, rising 0.5% q-o-q and bringing overall progress for the year to 3.5%. However, this marks a considerable decline from the 8.9% rental development logged in 2023.
Furthermore, enhanced trade protectionism has actually brought unpredictability into global markets, potentially affecting company confidence and financial investment decisions.
The consumer price index also expanded 0.5% q-o-q in 4Q2024, alleviating from the 1.2% development in the last quarter. Last year, industrial property prices climbed 2.1%, even less than half of the 5.1% rise documented the year prior to.
On the other hand, Colliers prepares for commercial demand to continue to be sustained by the semiconductors, logistics and advanced manufacturing fields. It even expects industrial leasing activities to see a steady ramp-up over time as plans become clearer and market sentiments strengthen, underpinned by the recurring recuperation in the chip cycle.
In the meantime, given the bump in supply and the predicted balance in rental fees, this might be a good year for tenants with even more choices concerning market, says Colliers. “New industrial developments, outfitted with even more modern requirements, could urge more services to transfer from older, ageing manufacturing offices to more recent jobs,” says Nicolas Menville, executive director and head of Singapore-based commercial clients for Colliers.
Industrial property costs and rents in Singapore are expected to tone down this year in the middle of higher supply and weak need, according to a February study report by Colliers. The firm is predicting both total yearly industrial rentals and price growth to moderate to between 0% to 2% in 2025, contrasted to the 3.5% growth chalked up for both in 2024.
