Factory rents rise 2.7% in H1 on stronger manufacturing sentiment

Prime logistics rents are expected to grow 2%-3% YoY in 2026.

Singapore's conventional factory rents rose 1.2% quarter-on-quarter (QoQ) in the second quarter (Q2) 2026, bringing growth in the first half (H1) of the year to 2.7%, as positive manufacturing sentiment supported industrial property demand.

The economy recorded real GDP growth of 6.% year-on-year (YoY) in the first quarter of 2026, whilst the Purchasing Managers' Index rose to 51.3 points in June, its highest level since November 2018. 

Manufacturing output also expanded 13% in May, driven by the electronics cluster.

Cushman & Wakefield's (C&W) Marketbeat report found that prime logistics rents were unchanged during the quarter but rose 1.5% in H1 2026, with the vacancy rate at 4.9%.

"Prime logistics rents are expected to grow by 2.0%-3.0% YoY in 2026, higher than 0.9% YoY in 2025, supported by constrained prime logistics supply, elevated development costs, and resilient demand," the report said.

No major prime logistics projects are expected to be completed in 2026, whilst only around 450,000 sq ft is expected to come onstream in 2027. The three prime logistics projects completed in 2025 achieved average take-up of around 80%.

City-fringe business park rents fell 0.1% QoQ, due to softening achievable rents observed at some of the properties in C&W's basket. They still rose 0.6% year-to-date (YTD) in H1 2026.

"Other industrial segments, including suburban business parks, science parks, high-tech factories, and warehouses, have recorded moderate rental growth ranging between 0.4%-2.0% YTD in H1 2026," the report added.

Meanwhile, artificial intelligence-related demand is expected to strengthen occupier demand for high-tech factories, business parks, and temperature-controlled warehouses.