Business parks remain a bright spot amid the gloom surrounding industrial property, with rents moving up in the third quarter, said consultants DTZ.
It noted that average monthly rent was $5 per square foot (psf) in the three months to Sept 30 – up 2 per cent on the second quarter, a rate of growth that has been maintained all year.
The demand for business parks was due in part to “the spillover from higher office rents”, DTZ reported yesterday.
“There are more cases of qualifying office occupiers who are drawn by the lower business park rents relative to office rents,” said Ms Cheng Siow Ying, DTZ’s executive director of business space. She noted that the difference in rent can be as high as 30 per cent.
Ms Cheng cited Galaxis, a business space in one-north slated to be completed by the end of the year. It has already garnered a pre-commitment rate of more than 40 per cent, with signed leases from firms such as Canon, Oracle and Electrolux. “The movement of qualifying office occupiers to business parks is expected to continue as average office rents continue to rise,” she added.
While business parks are enjoying better times, average monthly rent for some conventional industrial space has stayed flat. First-storey rents came in at $2.20 psf from the second quarter while those for upper floors stayed at $1.80 psf.
There were 203 sales of strata-titled industrial property in the third quarter, down about 36 per cent from the second quarter. There have been 842 transactions so far this year, significantly lower than the 1,986 in the same period last year.
A report from CBRE, also out yesterday, found that the rent gap between business parks in the city fringe and those in the rest of the island widened to 33 per cent in the third quarter, up from 29 per cent in the second quarter.
“Occupiers are more keen on higher specifications and quality developments which (business parks in the) city fringe have been able to provide,” said Mr Michael Tay, executive director of office services at CBRE.
“Location and connectivity are also important considerations which prompt occupiers to pay the premiums in rent.” He added that the difference in rent for business parks in the city fringe and those in the rest of the island is expected to “stabilise”. “Rent in new developments will edge up but this increase is likely to be restrained by older assets that offer more competitive rents.”