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The demand is attributed to the popularity of e-commerce and food delivery services.
Colliers International head of research for Singapore Tricia Song believes demand for food factories in Singapore will remain healthy, on the back of the growing popularity of e-commerce and food delivery services, reported The Business Times.
But while demand is expected to lag behind supply in 2019-2020, Colliers saw delivery service providers solidify their presence amidst rising competition.
In March 2018, foodpanda opened its first central kitchen which boast of a dine-in option in Woodlands Industrial Xchange. Deliveroo had also launched its second central kitchen within CT Hub 2 a month before that.
Food factories are facilities dedicated to food storage, processing, cooking and packaging for delivery to retail customers and food and beverage (F&B) establishments.
Demand for such properties are also driven by F&B operators eyeing to streamline their retail spaces as well as the government’s push for innovation and greater productivity in Singapore’s food industry.
In a research report monitoring the performance of food factories within Singapore, Colliers noted that demand for food factories closer to the city centre remained strong, with mature food manufacturing areas such as Bedok North, MacPherson and Pandan Loop maintaining occupancy rates of between 80 percent and 100 percent.
Similar properties in farther and newer locations, including Senoko and Tuas tended have occupancy rates of about 60 percent.
And with the robust supply coming on-stream, prices and rents of food factories will probably remain stable in the next three to five years, said Colliers.
Around 3.68 million sq ft of food factory space – which is nine to 10 percent of present food factory stock – is in the pipeline. Of this, over 80 percent is expected to be completed in 2019 and 2020.
The supply influx will mostly be in Singapore’s east, west and north regions.
Colliers revealed that central kitchens near residential neighbourhood or the central business district area command higher prices and rents.
Monthly rents in established food zones range between $1.80 per sq ft (psf) and $2.40 psf in the northern region and $1.50 psf to $2.40 psf in the western region.
“There are a few bright spots in the industrial property market, with food factories being one of them,” said Colliers International senior director of industrial services Dominic Peters.
“We recommend occupiers be mindful of the regulations and keep an open mind to facilities further from the city centre in view of rent savings; and operators to continuously upgrade their facilities to remain competitive.”
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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