For four straight quarters in three months ended September, there was a marked decline in Private industrial property rents, although the pace of deterioration has already moderated.
The monthly average gross rental value for first-storey private conventional industrial space is shown in the data from DTZ Research to have fallen in the third quarter by 2.4 percent to $2 per sq ft from $2.05 per sq ft in the second quarter.
Compared to 6.8 percent drop seen in the second quarter, the slide in the third quarter was smaller. Likewise, in the current quarter, the average rent for upper-storey space went down by 5.9 percent to $1.60 per sq ft, smaller compared to 8.1 percent drop in the second quarter.
During the third quarter, DTZ also noted the moderation in the decline of rental value for high-tech industrial properties, including spaces for science park and business park. After a drop of 12.8 percent in the second quarter, the monthly average rent for such space decreased in the third quarter by 5.9 percent to $3.20 per sq ft.
From the peak in the third quarter of last year, the monthly average rents of spaces for upper-storey and first-storey private conventional industry have plummeted 22 percent and 14.9 percent, respectively. Over the same period, the average rental value for high-tech industry has incurred 28.9 percent loss.
However, rentals for office spaces have even experienced substantial decline. Consequently, the gap between office and high-tech rents in suburban locations has significantly narrowed down during the third quarter.
Based on the DTZ Data, the $3.20 per sq ft monthly average rental value for high-tech industries in the third quarter was just 8.6 percent lower than the $3.50 per sq ft average monthly rent for Tampines Finance Park offices.
”Despite the narrower rental gap, many occupiers are unlikely to relocate from high-tech industrial space back to office space. The relative rental stability of high-tech industrial space compared to the volatility in office rents is a consideration for occupiers taking a long-term perspective,” said DTZ.
“Rents for industrial space are likely to remain weak going into 2010, due to the large incoming supply and weak demand,” said head of South-east Asia Research, Chua Chor Hoon.
An approximate of 27.1 million sq ft of spaces for private industries are in the pipeline, which is expected to be completed by 2013. Of this, an approximate of 10.4 million sq ft is anticipated to enter the market, which includes main projects like DBS Asia Hub, The Kendall and Northstar@AMK.