Industrial tenants favour specialised facilities amidst AI boom

Most are prioritising what the space can support instead of how big it is.

Demand in Singapore's industrial market is moving away from how much space occupiers need towards facilities that can support specialised production, research and technical infrastructure, according to Colliers.

The property consultancy said manufacturers, technology firms and research-intensive industries were placing greater emphasis on functionality, flexibility and operational compatibility, creating more distinct demand patterns across the market.

“The next phase of industrial growth will be shaped less by how much space occupiers require and more by what that space needs to support,” Colliers said.

The shift is occurring against a backdrop of resilient manufacturing activity. Advance estimates from the Ministry of Trade and Industry showed the economy expanded 5.7% year on year in the second quarter of 2026, with manufacturing leading growth, particularly in the electronics and precision engineering clusters. The JTC All Industrial rental index rose 0.5% in the quarter, its 23rd consecutive quarter of growth.

“Growth in the electronics and precision engineering clusters is reinforcing demand for facilities that support advanced manufacturing, research and technical capabilities, particularly as companies continue to invest in higher-value activities," said Catherine He, Head of Research, Colliers Singapore.

The report cited several developments during the quarter, including Applied Materials expanding its manufacturing and research operations with a new $600m campus in Tampines, and Applied Angstrom Technology establishing an AI hardware research and development centre in Woodlands.

“Occupiers are taking a more deliberate approach to real estate decisions, with the strongest interest concentrated on facilities that support specific production and technical requirements," said Nicolas Menville, Head of Singapore-based Industrial Clients, Colliers Singapore.

Colliers said robust global demand for AI-related semiconductors and exports was expected to continue supporting manufacturing activity in the second half of 2026.

It maintained its forecast of 1% to 3% rental growth and 3% to 5% price growth for the year.

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