Net take-ups for industrial spaces of JTC Corporation had fallen again during the fourth quarter of 2008, as the economic downturn gave too much pressure on businesses.
The 2008 JTC facilities report released yesterday showed the agency had rented out or leased around 20,000 square metres of ready-built facility spaces during the forth quarter, a 33 percent drop from the third quarter. Most of the affected facilities include locations from business parks and flatted factories as well as on standard factories.
Some industry observers expected several companies to return spaces to JTC as the weakened economy continued. However, this prediction didn’t happen during the fourth quarter. In fact, the termination of ready-built factory spaces had dropped by 30 percent from the third quarter to almost 21,200 square metres.
About 48 percent of the terminations were due to the merging of several business operations. The manufacturing sectors, which included precision and electronics engineering, accounted more than half of the total pull-backs.
The JTC said the size of terminated spaces was higher in Q3 2008 because more companies had moved out their spaces scheduled for product renewal. This means that JTC systematically closed their ageing facilities in order to redevelop the sites.
Chua Chor Hoon, DTZ senior director for research, also suggested that several companies could sub-let their excess space instead of pulling them out altogether. This move may also help them avoid relocation costs.
After the JTC accounted their terminations, its net allocation for ready-built factory space had dropped to negative 1,200 square metres in Q4 2008, further swinging from Q3’s negative 500 square metres.
Despite of the weak performance during the fourth quarter, the ready-built factory space still enjoyed a net take-up rate for the whole year of 2008, recording a net allocation of about 90,700 square metres as compared to 88,700 square metres of the previous year.
Much of the enjoying output was largely due to JTC renting or leasing out more business park space, particularly in the Fusionopolis development area.
Additionally, the occupancy rate for its ready-built factory space also increased in 2008, a 10-year higher of about 96.8 percent.
JTC’s take-up for prepared industrial land dropped during the fourth quarter in areas such as Tuas Biomedical Park and Jurong Island, which was complete with infrastructure in order for the leaseholders to develop and improve their facilities. The net allocation for this was 17.5 hectares, a 49 percent drop from the third quarter.
Terminations also dropped over 70 percent to 6.1 hectares during the fourth quarters. For 2008, net allocation of the prepared industrial land was about 200.9 hectares, a 41 percent low compared to the 341.2 hectares in 2007.
JTC said that in 2008, “sustained performance was against the backdrop of global economic uncertainties and a very challenging environment towards the latter part of the year.”