Buoyant demand seen for industrial space

Buoyant demand seen for industrial space

By MICHELLE QUAH

DEMAND for industrial space in Singapore is expected to remain buoyant thanks to continued business expansion and new investments in many industrial sectors, says Ascendas Real Estate Investment Trust (A-Reit).


The trust also predicts that office rents will climb further due to 'the extremely tight Central Business District office supply'. Higher rents will likely result in more tenants moving back-end offices to suburban locations, it reckons.

And given the limited new supply of quality suburban office space, A-Reit expects demand for quality business park and high-spec industrial space to be strong.

'In view of this, A-Reit expects continued healthy demand in the business and science parks sector, as well as for hi-tech industrial space. However, the outlook for the flatted factories and the logistics and distribution centres sectors remain subdued because of the relatively high vacancy rates in expected new supply particularly in the latter sector where 471,000 sq m of space is expected in 2007,' A-Reit said in a statement yesterday.

A-Reit was announcing that it had renewed and signed new leases - including expansions - amounting to a net lettable area of 60,794 sq m for the three months ended Mar 31, 2007.

These leases represent 8.8 per cent of the net lettable area of its multi-tenanted buildings and an annualised rental income of $12.4 million.

A-Reit's overall portfolio occupancy rate remained at 96.6 per cent at Mar 31, 2007, compared with 95 per cent in the previous corresponding period.

Tan Shu Lin, fund manager of Ascendas-MGM Funds Management, said: 'We will continue to strengthen our relationship with our existing tenants and also market and attract new tenants to our properties so as to maintain and enhance A-Reit's steady stream of income.'

A-Reit's portfolio comprises 51.4 per cent multi-tenanted buildings and 48.6 per cent sale-and-leaseback properties based on portfolio value.