ST : Warehouses: S'pore now a costlier choice

Mar 31, 2010

Warehouses: S'pore now a costlier choice

SINGAPORE is becoming a relatively more expensive location for businesses to site their warehouses.

According to a survey of 139 cities worldwide conducted by Colliers International, the Republic was the ninth most expensive city for prime logistics space during the second half of last year, even though rents remained stable.

In the previous six-month period, Singapore had ranked 14th.

The Colliers report cites the Singapore dollar strengthening against the US dollar and larger falls in rents in cities such as Seoul, Sao Paolo and Honolulu, as key reasons for the city state becoming more expensive relative to other locations.

In the second half of last year, rents for prime warehouse space in the MacPherson area remained relatively stable at about $1.50 per sq ft (psf) per month.

Warehouse space made up about 18.7 per cent of total industrial space in Singapore as of end-December last year.

Colliers noted that the industrial property market here remained largely stable in the first quarter on the back of improving business expectations in manufacturing.

First-quarter leasing activities were dominated by relocations and renewals, but expansions by firms remained scarce.

Colliers International's director of research and advisory Tay Huey Ying is upbeat about future prospects noting that during the downturn last year, many firms were left with spare capacity and had to close down plants. 'So they are now utilising their spare capacity and, hopefully, by the second half, some of them might be looking to expand.'

And, with recovery in the manufacturing sector gaining traction, demand for space could rise.

Rentals of conventional industrial space are forecast to continue to firm up - rising by up to 5 per cent over the next three quarters this year, Colliers said.

JOYCE TEO