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Following an 8.5 percent drop in 2016, rents of business parks remained stable quarter-on-quarter in Q1 2017, revealed a report from Edmund Tie & Co.
Rents of older business parks came under pressure last year from the completion of Mapletree Business City II and Ascent, which also saw occupancy rates drop from 83.7 percent in Q4 2015 to 81.3 percent in Q4 last year.
The report noted that the manufacturing sector witnessed an improvement in purchasing orders and exports towards the end of 2016, and the momentum spilled over to 2017. It added that the electronic sector’s sustained growth, which began in H2 2016, helped support demand for industrial space.
“A case in point was chipmaker Micron Technology, which opened its newly expanded 3D NAND flash memory fabrication facility in September 2016,” it revealed.
Aside from the stronger demand, there is also no anticipated supply in the pipeline this year, while the two business parks in the pipeline for next year are single-user developments.
The demand for business parks, nonetheless, will be supported by office developments outside the CBD which are in the pipeline this year.
The property consultancy believes that the expected completions of strata-titled office development Vision Exchange in 2017 and Paya Lebar Quarter, which is the office component of Lendlease’s mixed-use development, in 2018, will put a lid on any increase in rents.
“We anticipate the rents of business parks to largely remain stable, albeit with some minor fluctuations. If demand for business park space were to increase further, we would expect more decentralised offices or business parks in the pipeline,” said Dr Lee Nai Jia, Research Head at Edmund Tie & Co.
Separately, the consultancy revealed that the pick-up in manufacturing supported the rents of first-storey multiple user factory space.
“Rents remained resilient as first-storey space are still highly demanded,” it said.
With this, Edmund Tie & Co. expects rents for business parks and industrial spaces to remain stable.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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