Bookmark & Share
Despite a drop in occupancy rates due to higher supply, average monthly gross rents of business park space inched up by 1 percent to S$5.05 per sq ft in Q1 2015 versus the previous quarter, according to a report from DTZ.
The higher supply is attributed to the completion of The Shugart, Galaxis, and Haite at Changi Business Park in 2014, which added about 1 million square feet of space.
In the first quarter, average monthly gross of hi-tech industrial space also rose by 3.1 percent to S$3.30 on a quarterly basis as the total pipeline for the year remains tight as compared to 2014.
Given the shortage of supply, strategically located industrial buildings with hi-tech specifications like the Aperia is expected to continue to attract major Multinational Corporations (MNCs). In fact, Intel, Volkswagen, Roche Diagnostics have already signed agreements to occupy space in the said building, which is almost fully occupied.
Looking ahead, rents of business park space are expected to climb further in line with the growing in demand, said DTZ Executive Director of Business Space Cheng Siow Ying.
“In addition to demand from pharmaceutical, software and technology firms as well as the backend operations of banks and financial institutions, demand also emanated from tenants substituting lower cost business parks for office space due to the increase in office rents.”
“With the lack of pipeline business park supply in the Central region until 2016 where the bulk or 1.7 million square feet of the supply will emerge (1.5 million square feet of which is not owner-occupied), business park rents are expected to continue to increase by about 4.0 percent to 5.0 percent by the end of the year,” Cheng added.
Image: Changi Business Park (Source: Wikimedia Commons, User: Sengkang)
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
Related Articles:
Business parks occupancy rates remained healthy in Q1: report