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The volume of new leases is also expected to drop as majority of firms have shelved their relocation plans and renewed their current lease instead.
Cushman & Wakefield expects industrial rents in Singapore to moderate this year as shrinking global demand impacted the local manufacturing sector.
The real estate services firm believes that location will be a major factor in determining rental growth at different micro-markets during the Covid-19 outbreak, reported The Business Times.
In fact, rents for factories and better-quality industrial buildings will likely be more affected by Covid-19 because of their outlying locations.
The volume of new leases is also expected to drop as majority of firms have shelved their relocation plans and renewed their current lease instead.
“Businesses are unwilling to allocate any additional capex during this period,” noted Cushman & Wakefield.
The degree of moderation for warehouse rents, however, is expected to be lower due to higher e-commerce activity and deliveries.
This comes as the controls on people movement triggered an unprecedented growth in e-commerce activity, said Christine Li, Head of Research for Singapore and South-east Asia at Cushman & Wakefield.
“Given the increased demand for delivery of online purchases of fresh food, medical supplies and general essential purchases, cold chain logistics facilities will probably register heightened leasing activity ahead,” she added.
Despite the ongoing Covid-19 outbreak, Cushman & Wakefield noted some positive developments in the market during the first quarter.
Among them is GrabFood’s launch of a 6,000 sq ft cloud kitchen at Lam Soon Industrial Building. Deutsche Messe also inked a memorandum of understanding that will see the German event organiser hosting its flagship manufacturing trade show within the city-state for an additional five years.
Cushman & Wakefield expects the trade show to accelerate and enhance the adoption of Industry 4.0 technologies among Asia-Pacific manufacturers.
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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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