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Logistics and third-party logistics (3PL) companies are the top warehouse occupiers in Singapore, taking up 44 percent of occupied space.
There are around 117 million sq ft of warehouse space in Singapore, more than 80 percent of which are found in the West and East regions of the country
Logistics and third-party logistics (3PL) companies are the top warehouse occupiers in Singapore, taking up 44 percent of occupied space, revealed Colliers International in a report named “The Future of Logistics Real Estate”.
There are around 117 million sq ft of warehouse space in Singapore, more than 80 percent of which are found in the West and East regions of the country.
“Singapore is a top class logistics hub with the world’s busiest transhipment port, second busiest port in terms of total cargo tonnage handled, and the 12th busiest airport by cargo traffic as of 2018,” said Tricia Song, Colliers International head of research for Singapore.
“As such, Singapore has been the location of choice for e-commerce players to establish their footprint when entering the region. The emergence of e-commerce in recent years has had a positive spillover to the 3PL and logistics sector in Singapore.”
Along with the logistics and 3PL sector, the other warehouse occupiers are IT and technology (which accounted for five percent of occupied warehouse space), oil, marine and energy (five percent), food, chemicals and pharmaceuticals (six percent), distributors (10 percent) and the manufacturing sector (30 percent).
Colliers Research believes e-commerce growth and regional trade should translate to stronger warehouse demand in the long term and benefit the country given its status as a logistics hub.
However, it cautioned that greater efficiencies in stock management and inventory forecasting, along with Singapore’s small market size could possibly moderate the need for drastic warehouse expansion.
It has also ranked Changi as the top spot for occupiers, followed by Boon Lay/Jurong West and Tuas.
The ranking was based on four criteria: accessibility to sea ports or airport; availability of quality warehouse stock with consideration of future and existing supply, including vacancy rate; rent premium compared to the island-wide average; and existence of a logistics cluster and supporting infrastructure.
JTC rental index, meanwhile, revealed that country-wide warehouse rent has been on a downward slope for more than five years, with Q2 2019 rental index declining as much as 19.4 percent from its peak in Q4 2013.
This is probably due to the arrival of new supply averaging 6.3 million sq ft annually from 2014 to 2018, bringing the total warehouse stock to 117 million sq ft as of Q2 2019.
“We forecast logistics rents to remain weak on the deterioration in global trade and the potential economic slowdown in the near-term,” said Song.
“However, there are potentially some upside ahead, particularly from the rising e-commerce and logistics sector. In addition, with a more benign warehouse supply pipeline, we expect occupancies and rentals to improve from 2022 onwards,” she added.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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