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THE vacancy rate for business parks across Singapore reached its highest level in 14 years, measuring 22.1 per cent in the last quarter of 2024, up from 21.6 per cent in the previous corresponding period.

This comes as overall market sentiment for the business park segment remains lukewarm, despite some interest in the one-north cluster, said Savills Research in a report on Friday (Feb 14).

The completion of the first phase of Punggol Digital District in the second half of 2024 also drove vacancies up, it noted.

Notably, vacancy rate in the area around ESR Bizpark @ Chai Chee hit a record high at 31.8 per cent in Q4 2024.

The cluster comprising Mapletree Business City and Science Park logged a vacancy rate of 15.4 per cent in the recorded period, up from 13.7 per cent in Q4 2023.

Rising rents

Rents for business parks continued on an upward trajectory, with the JTC rental index rising at a slower pace of 1.9 per cent year on year in Q4 2024, from 3.4 per cent.

As for Savills’ prime business parks, monthly rents jumped 6.4 per cent on the year to S$6.27 per square foot (psf) – the highest since 2013, when the data was first recorded.

Rents for its standard business parks, however, remained “relatively flat” when compared with that of the last four years. They were up 0.2 per cent year on year at S$4.04 psf in Q4 2024.

Savills’ prime business parks refer to spaces in the newer clusters, which range from 1,000 to 5,000 square feet (sq ft), and have an average monthly asking rent of at least S$5.50 psf.

Standard business parks refer to those in older clusters, which range from 1,000 to 5,000 sq ft, and have an average monthly asking rent of at least S$3.50 psf.

Rents for high-spec industrial spaces continued to rise at a muted pace of 0.5 per cent on the year to S$3.92 psf.

Rental market

Singapore’s industrial leasing activity softened on the back of weaker demand for single-user factory and warehouse space, which was down 25 per cent and 16 per cent on the year, respectively.

Total leasing volume, based on JTC’s rental data – comprising only single-user factory, multiple-user factory and warehouse spaces – shed 4.5 per cent on the year to 2,933 tenancies in Q4.

This brings the total number of deals in 2024 to 12,093 – 3.7 per cent lower than the previous year and the lowest in the last three years, said Savills.

Based on its basket of private industrial properties, monthly rents for prime multiple-user factories rose more slowly, at 2.8 per cent on the year, to S$2.28 psf in Q4. Monthly rental growth was 10.5 per cent in Q4 2023.

The consultancy’s prime warehouse and logistics property rents climbed by 4.9 per cent year on year to S$1.73 psf per month in the recorded period.

Its private multiple-user factory properties range from 1,000 to 3,000 sq ft, and have an average monthly asking rent of at least S$1.50 psf. Its multiple-user warehouse assets are between 2,000 and 80,000 sq ft in size, and have an average monthly asking rent of at least S$1.30 psf.

Outlook

Ashley Swan, executive director of commercial and industrial at Savills Singapore, said: “While we have seen rental increases for newer, better spec-ed business park space, we expect that segment… to continue to face challenges as vacancies rise throughout.”

He also expects all industrial segments to face challenges in 2025, but “remain largely resilient”.

Savills also noted that amid the limited supply, multiple-user factory rents are expected to continue rising at the same pace of up to 3 per cent this year.

“As the bulk of the new prime logistics space has been pre-committed, occupancy and rents are expected to remain stable,” it said.

Meanwhile, new completions of warehouses and business parks this year may continue to weigh on rents and vacancy levels.

Alan Cheong, executive director of research and consultancy at Savills Singapore, said the supply boom from the upcoming Punggol Digital District and the redevelopment of 1 and 7 Science Park Drive “could potentially put further pressure on rents and occupancy, particularly the older developments”.

“For business parks, we believe that centrally located ones may still be able to hold up rents for 2025. Older parks may continue to experience elevated vacancy levels and weaker rents,” he noted.