Overall Vacancy For Singapore Business Parks Hit 17.5% In Q4

Office Finder Team

February 24, 2023

Singapore

SINGAPORE – In the last quarter of 2022, the vacancy level of business parks across the city-state surged by 2.7 percentage points to 17.5 percent – the highest vacancy rate among industrial asset classes in the city-state, according to a report published by Savills on Friday afternoon (24 February, SGT).

The real estate consultancy said this was largely due to a 9.3 percentage point uptick in vacancy levels in business parks in Singapore’s West Region. In particular, vacancy level in the International Business Park (IBP) spiked by 12.8 percentage points from 24.5 percent in Q3 to 37.3 percent in Q4 2022.

Besides IBP’s weaker connectivity to primary transport nodes, the higher vacancy levels were also attributed to the partial completion of Perennial Business City during the last quarter of 2022.

In comparison, the vacancy rates at Changi Business Park edged up by 0.5 percentage points to about 24 percent, while that in one-north inched up by 0.8 percentage points to about 5 percent. For Changi Business Park, the growth in vacancy level came after a 1.3 percentage point drop in
vacancy level in Q3 2022.

“Business parks that are not as well-connected to major transport nodes and do not have quality features may be less favoured by tenants. Hence, landlords will need to reduce their rents to try to shore up the occupancy,” Savills noted

The property consultancy said this was evident when looking at the monthly rent of standard business parks, which declined 1.1 percent quarter-on-quarter following two straight quarters of increase to S$4.00 psf in the last three months of 2022. Similarly, the monthly rents of prime business parks dipped by 0.3 percent on a quarterly basis after five consecutive quarters of growth to S$5.91 psf in Q4.

Standard business park space refers to those located in older clusters. Conversely, prime business parks are those situated in newer clusters. The unit sizes of standard business park space and prime business park space range from 1,000 sq ft to 5,000 sq ft.