High-spec facilities to drive industrial demand

Realion expects rents to rise by up to 3% in 2027 despite the completion of 12.3 million sq ft of new space.

Demand for modern, high-specification facilities is expected to support the industrial property market in 2027, although rising supply could place greater pressure on older buildings, according to Realion.

The property consultancy forecasts industrial rents to increase by between 1% and 3% in 2027, broadly matching its projected growth of 1.8% to 3% in 2026.

Industrial property prices could rise by 2% to 4%, slightly slower than the 3% to 4% growth projected for 2026.

Leasing volume is expected to remain broadly stable at between 12,500 and 15,500 transactions, compared with an estimated 13,000 to 15,000 deals in 2026.

Overall industrial rents rose for the 24th consecutive quarter, reaching a record high in the third quarter. Meanwhile, rents rose 2.1% YoY, unchanged from the previous quarter.

The industrial property price index increased 1% QoQ, accelerating from the 0.6% growth recorded in the second quarter.

All industrial property types posted record rents, although occupancy at multi-user factories, single-user factories and business parks declined.

Warehouses were the exception, with occupancy increasing to 89.7%.

Realion expects occupiers to become more selective, widening the performance gap between newer, high-specification facilities and ageing industrial buildings.

Modern properties capable of supporting advanced manufacturing, sustainability requirements and changing supply chains are expected to remain in demand.

Artificial intelligence investments could also create opportunities for facilities supporting semiconductor production, precision engineering, advanced machinery and other technology-related supply chains.

Existing semiconductor and advanced-manufacturing ecosystem, infrastructure and skilled workforce could help the country capture part of this demand, Realion said.

However, increased supply will limit broader market growth.

Around 2.7 million sq ft of industrial gross floor area was expected to be completed in the final quarter of 2026, followed by another 12.3 million sq ft in 2027.

The larger pipeline could weigh on rents and occupancy at ageing buildings, particularly those with low ceilings, restrictive column layouts or poor energy efficiency.

Realion said some owners may need to carry out asset-enhancement works to meet the structural, technological and sustainability requirements of modern occupiers.

The market also faces competition from neighbouring countries with lower operating costs. Some low-margin manufacturing activities could relocate overseas, placing further pressure on landed factories and other properties serving cost-sensitive occupiers.

Against these headwinds, Realion expects demand for selected business-one factories and high-specification buildings to remain resilient, supporting moderate rental and price growth in 2027.

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