Savills Singapore has announced a notable 6.4% year-on-year increase in monthly rents for its prime business park spaces, marking the highest growth since 2013. Despite this, the overall sentiment in the business park sector remains lukewarm, with island-wide vacancy rates climbing to 22.1% in the fourth quarter of 2024, the highest in 14 years.
The rise in rents for prime business parks contrasts with the stagnant growth in standard business parks, which saw a mere 0.2% increase year-on-year. High-spec industrial spaces also experienced a modest rise of 0.5%. The completion of the first phase of the Punggol Digital District in the second half of 2024 contributed to the increased vacancy rates, particularly in areas like ESR Bizpark @ Chai Chee, which hit a record high vacancy rate of 31.8%.
Savills’ research further highlights a 4.9% year-on-year increase in monthly rents for prime warehouse and logistics properties, despite a general weakening in leasing demand across the industrial sector. The single-user factory segment recorded the largest decline in demand, with a 17.2% drop year-on-year.
Ashley Swan, Executive Director of Commercial & Industrial at Savills Singapore, noted, “While we have seen rental increases for newer, better spec-ed business park space, we expect that segment of the industrial market to continue to face challenges as vacancies rise throughout.”
Looking ahead, Savills anticipates that centrally-located business parks may maintain stable rents in 2025, while older parks could face continued pressure from elevated vacancy levels and weaker rents.
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