Huttons’ comments on JTC’s 1Q 2023 numbers

27 April 2023

Prices and rents of industrial space continued to grow by 1.5% and 2.8% in 1Q 2023. Prices have moderated for the second straight quarter. Rents continued to rise because these tenancies were signed during the Covid years when they were lower.

Occupancy rate of industrial space weakened further by another 0.6% in 1Q 2023, following on the fall of 0.3% in the previous quarter. Demand for industrial space plunged from 268,000 sq m in 4Q 2022 to a mere 5,000 sq m in 1Q 2023. The single-user segment demand contracted the most by 50,000 sq m.

Singapore’s manufacturing sector contracted by 6% year-on-year in 1Q 2023 and this is hurting the demand in the single-user segment. Almost all manufacturing clusters saw a decline in output in 1Q 2023 and this has led to some companies giving up space. Demand in the warehouse segment has also contracted due to the weak NODX in the first two months of 2023.

The weakness in manufacturing and NODX is likely to persist in the coming months of 2023 and will impact demand. The higher than usual supply in the pipeline will create an overhang in the industrial market and occupancy could trend lower. This may add downward pressure on prices and rents in 2023. Prices and rents of industrial space may see not more than 3% growth in 2023.