Industrial market continues to grow in 2Q2022 despite headwinds: Cushman & Wakefield

Changi Business Park

SINGAPORE (EDGEPROP) – The industrial market continued to improve across most segments, according to Cushman & Wakefield’s 2Q2022 industrial report released today (July 4). Based on data from the Ministry of Trade and Industry, the manufacturing sector expanded by 7.1% year-on-year in the second quarter, making it the largest contributor to GDP growth in the quarter.

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Business park rents in fringe and suburban areas, as well as factory rents, remained stable. Tight supply and low vacancy rates continued to drive rents higher in other industrial segments. Prime rents for logistics and warehouses saw the most significant growth in the second quarter, rising 2% and 1.5% quarter-over-quarter, respectively.

“The flight-to-quality movement has driven high-tech factory rents up as occupiers seek newer, office-like industrial space near city locations to improve talent retention and corporate image,” the report said.

However, as the economy reopens and pandemic-fueled demand for goods is redirected to travel and leisure, “e-commerce players are adopting a watch-and-wait attitude,” warns Wong Xian Yang, head of research at Cushman & Wakefield. This is further compounded by current macroeconomic uncertainties, Wong adds.

Wong expects the industrial market to continue positive long-term rent growth, supported by demand for high-value manufacturing and e-commerce space. Demand will gravitate towards newer facilities with better specifications, incentivizing owners to redevelop and upgrade assets. Capital values ​​are expected to remain stable due to limited future supply and institutional-level industrial stocks.

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