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About 41.7 million square feet (sq ft) of industrial space is expected to enter the market in 2015 and 2016, surpassing last year’s new supply of 21.1 million sq ft, according to a report from Maybank Kim Eng.
Not only does it far exceed the demand, which only averages at 10.4 million sq ft per year, the upcoming huge supply would also negatively affect property owners, especially real estate investment trusts (REITs).
“Supply of factory, warehousing and business-park space is expected to touch a record. The last time this much of space flooded in was in 1995-1998, when space rose 80 million sq ft or [by] 37 percent,” said the report.
“Back then, vacancies jumped from 2.9 percent to 10.8 percent. We are seeing similar patterns, with vacancies up from a low of 6.7 percent in 2011 to 9.0 percent in 2014,” it added.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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