Prime industrial rents decline as occupiers become more selective – Savills Singapore

Ashley Swan, Executive Director, Commercial & Industrial, Savills Singapore, told RETalk Asia “Cost pressures remain at the forefront of occupiers’ decision-making and  have led to them being increasingly selective with their real estate decisions as they re-align these considerations with operational needs. This more measured  approach coupled with increased demand from the technology as well as advanced  manufacturing sectors is reflected in the stronger performance of the high-specs  industrial and newer business park segments where newer, more efficient and  better equipped facilities generally offer increased value. In contrast, we expect  older facilities to continue to face challenges going into the new year with limited  supply helping to soften any decline.” 

In contrast, Savills’ business park rental basket returned to growth after a short lived decline in the preceding quarter. Standard business park monthly rents rose  by 0.5% QoQ, while prime monthly rents increased more strongly by 2.6% QoQ. The outperformance of prime space reflects occupiers’ continued flight to quality,  with demand favouring newer workplaces offering superior specifications,  sustainability features and tenant amenities. 

This preference was similarly evident in the high-specification industrial segment,  where rents rose by 1.4% QoQ. Demand from technology, advanced  manufacturing and business services occupiers continued to favour newer, better equipped facilities. 

However, performance remained uneven across the business park market.  Vacancy in the Central Planning Region fell to 10.8%, its lowest level since Geneo’s  completion in early 2025. In contrast, weaker demand in older business park  clusters in the East and West Planning Regions contributed to a 0.7 percentage  point increase in the islandwide vacancy rate to 22.8%. 

Looking ahead, new industrial supply is expected to remain limited in 2026, with  706,000 sq ft of multiple-user factory space and 2.0 million sq ft of warehouse  space in the pipeline, well below their respective four-year annual averages of 3.3  million sq ft and 3.0 million sq ft. This should cushion the impact of softer demand,  with Savills forecasting JTC’s multiple-user factory rental index to remain flat in  2026 and its warehouse rental index to rise by 1%. (See Table 1) 

Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore, told RETalk Asia “Despite Singapore’s stronger economic performance, industrial rental  growth has not kept pace with the broader economy as businesses continue to face operating cost pressures. Limited new supply should help stabilise the market, but  rental performance is likely to diverge increasingly by asset quality. Newer business  parks and high-specification industrial developments should continue to outperform,  while older properties may face greater pressure to upgrade or reposition.”