Aging industrial assets to face pressure from incoming supply

JTC expects 1.2 million sqm of new industrial space to be completed in 2025.

Aging industrial properties in Singapore are expected to face mounting challenges as new supply enters the market compelling landlords to adapt to evolving tenant demands and competitive pressures.

Brenda Ong, Executive Director, Logistics & Industrial at Cushman & Wakefield said that tenants are resisting further rent hikes after a period of substantial growth, which has tempered overall rent increases. With some industrialists looking to streamline and consolidate their operations in Singapore, some landlords, especially for older industrial facilities have lowered their rental expectations slightly, though asking rents remain significantly higher compared to pre-pandemic levels.

Tricia Song, CBRE Head of Research, Singapore and Southeast Asia said that newer business parks with quality specifications and connectivity to amenities are more resilient, whilst older business parks are facing challenges in tenant retention and attraction.

Song said landlords of older warehouses may contemplate redevelopments into modern prime logistics facilities, or they may have to offer more incentives to attract tenants.

Meanwhile, Huttons said there could be possibilities of higher tariffs on exports to the US and a trade war between the US and China may lead to some reservations amongst industrialists and possibly lower manufacturing and export growth in 2025.

On the other hand, some manufacturers may explore offshoring in Singapore. Enquiries from end-users have been strong in 2024 and are likely to continue in 2025. Huttons were involved in several of the deals like the 124,000 sq ft Yishun Industrial Park A, 12,000 sq ft 9 Tuas View Close in 2024 and the divestment of 8 Tuas View Square by Mapletree Logistics Trust in 2025.

Huttons said their outlook for the industrial market is cautious.