In a landscape marked by shifting economic climates, Singapore’s factory and warehouse segments maintained steady leasing activity in the first quarter of 2025. According to a recent report by Savills, the total number of tenancies soared to 2,902, reflecting a modest year-on-year increase of 1.3%. However, the data also reveals that businesses are treading carefully—adopting a “wait-and-see” approach as they reassess their real estate needs amid a more challenging business environment.
“Companies are taking longer to make leasing decisions and are closely examining their space requirements,” the report indicated. Warehouse logistics emerged as the frontrunner in leasing performance, showcasing a 6.1% rise in tenancies compared to the previous year. In contrast, while demand for multiple-user factories remained robust with a 1.7% increase, the single-user factory segment experienced a significant decline, dropping 16.0% year-on-year.
In a curious twist, the overall factory vacancy rate diminished despite the lackluster demand for factory space, thanks to a tightening supply chain. A notable reduction in the inventory of single-user factories led to a 0.6 percentage point drop in vacancies, leaving the rate at 11.4% in Q1. Meanwhile, multiple-user factory vacancies also dipped slightly to 8.7%, down from 9.0% in the previous quarter.
On the flip side, warehouse space vacancies did see an uptick, rising by 1.0 percentage point to 9.5% in Q1. This increase stemmed from the completion of over 1.0 million square feet of new warehouse stock, including DB Schenker’s RedLion2 at 33 Greenwich Drive and a redeveloped logistics hub at 36 Tuas Road—a reminder that as one door closes, another one opens.
After a rental growth of 0.5% in the previous quarter, JTC’s rental index for all industrial properties continued its upward trajectory, persisting at the same rate in Q1 2025. Of particular note, JTC’s single-factory rental index experienced a more rapid increase of 0.8%, a contrast to its slower growth of 0.1% in the previous quarter. This elevation is attributed to the introduction of newly completed facilities featuring modern, high-tech specifications that demand premium rents.
Despite the promising signs in single-user factory rentals, the overarching industrial rental growth remained subdued due to muted performance in both multiple-user factories and warehouses, which expanded by 0.3% and 0.6% respectively. In terms of market pricing, Savills noted a rebound in the monthly rents for prime multiple-user factories, which edged up to S$2.29 per square foot following a brief decline. However, with an anticipated influx of warehouse supply this year, landlords are adapting their strategies, leading to a 2.5% decrease in rents for prime warehouse and logistics properties, now at S$1.69 per square foot.
What is the overall trend in leasing activity for Singapore’s industrial properties?
Leasing activity in Singapore’s industrial properties has shown modest growth, with a total of 2,902 tenancies recorded in Q1 2025, representing a 1.3% year-on-year increase, despite a cautious approach from businesses.
Which segments saw the most demand in the first quarter?
Warehouse logistics led the demand with a 6.1% increase in tenancies, while multiple-user factories also showed solid performance, growing by 1.7%. However, demand for single-user factories dropped sharply by 16.0% year-on-year.
How have vacancy rates shifted in Q1 2025?
The overall factory vacancy rate decreased to 11.4%, while multiple-user factory vacancies fell to 8.7%. Conversely, warehouse vacancies increased to 9.5%, partly due to the addition of over 1.0 million square feet of new warehouse stock.
