Commentary on JTC's Announcement on Q4 2024 Statistics

By Tricia Song (宋明蔚), Head of Research, Southeast Asia, CBRE

The JTC All Industrial Rental Index increased by 0.5% q-o-q in Q4 2024, with momentum accelerating from the previous increase of 0.3% q-o-q in Q3 2024. This was the 17th consecutive quarter of rental increase, bringing the full year 2024 increase to 3.5%. This is a moderation from 2023’s full year increase of 8.9%, even though manufacturing activity improved in 2024. The JTC All Industrial Rental Index has also risen 23.0% since the trough in Q3 2020. 

Among the various market segments, rents for the warehouse segment increased the most by 0.9% q-o-q, accelerating from the 0.1% q-o-q growth in Q3 2024. Although full year warehouse rental growth is 3.5%, moderating from 2023’s full year increase of 8.5%, the JTC Warehouse Rental Index has increased by 24.8% since the trough in Q3 2020, exceeding the JTC All Industrial Rental Index.  
• During the quarter, a major warehouse completion was Commonwealth Kokubu Logistics’ ramp-up cold chain logistics facility at 8 Jalan Besut (partial TOP). Despite new supply, robust warehouse demand led to occupancy rates rising the most across various market segments, by 0.4 ppt to 91.5% in Q4 2024. 

Rents for the multi-user factory segment rose by 0.4% q-o-q in Q4 2024, moderating from the 0.6% q-o-q increase last quarter. This brings full year rental growth for multi-user factories to 3.8% in 2024, moderating from 2023’s full year increase of 10.7%. That said, the multi-user factory segment recorded the highest full year rental growth across all industrial segments in 2024, with the JTC Multiple-User Factory Rental index rising by 27.9% since the trough in Q3 2020. 
• In Q4 2024, the only major multi-user factory completion was JTC Corporation’s Bulim Square (partial TOP). Although occupancy rate declined by 0.6 ppt to 91.0% during the quarter, it was a 0.5 ppt increase compared to Q4 2023 as occupiers continue to take-up space in modern high-specifications facilities throughout 2024. 

For the business park segment, rents rose by 0.2% q-o-q during the quarter, a reversal from the 0.2% q-o-q decline in Q3 2024. However, the full year rental growth of 1.9% is the lowest across all industrial segments in 2024. It is also a moderation from 2023’s full year increase of 3.4%. Although the business park segment faces pressure, with JTC’s vacancy rate increasing from 21.2% in Q3 2024 to 22.1% in Q4 2024, performance is notably two-tiered. CBRE Research understands that newer business parks with quality specifications and connectivity to amenities is more resilient, while older business parks are facing challenges in tenant retention and attraction. 

Lastly, rents for the single-user factory segment increased by 0.1% q-o-q, a reversal from the 0.3% q-o-q decline in Q3 2024. This brings full year rental growth for single-user factories to 3.2% in 2024, also moderating from 2023’s full year increase of 7.0%. The JTC Single-User Factory Rental index rose by 17.6% since the trough in Q3 2020. 
• Major completions in Q4 2024 were United Microelectronics Corporation’s wafer fab facility at Pasir Ris, as well as A&A works on Wilmar Foods at Jalan Ahmad Ibrahim. Despite new completions, occupancy rate increased by 0.3 ppt to 88.0% in Q4 2024. 

Prices increased by 2.0% q-o-q in Q4 2024, accelerating from the 0.5% q-o-q increase in the All-Industrial Price Index in Q3 2024. This marks the third quarter of prices increasing at a faster rate than rents. The single-user factory segment recorded a 2.3% q-o-q price increase in Q4 2024, accelerating from a 0.2% q-o-q increase in the prior quarter. The multi-user factory segment rose by 1.9% q-o-q in Q4 2024, also accelerating from a 0.7% q-o-q increase in the previous quarter. Although the U.S. Federal Reserve has cut the Federal Funds Rate by 100 basis points since September 2024, there could be a near term pause in interest rate cuts in 2025. While this would mean interest rates staying elevated higher for longer, leasehold industrial assets continue to see strong investor interest given the positive carry. 

There is around 12.9 mil sq. ft. of new industrial space (or around 2.2% of total stock) to be completed in 2025, with the warehouse segment accounting for 38% of 2025 supply. The remainder of the pipeline comprises single-user factories, business parks, and multi-user factories at 25%, 19%, and 17% respectively. 

Outlook

Economic and manufacturing performance: According to advance estimates from the Ministry of Trade and Industry (MTI), Singapore’s economy continued its growth in Q4 2024 as GDP expanded by 0.1% q-o-q on a seasonally adjusted basis, moderating from the 3.2% q-o-q increase in Q3 2024. For the full year, Singapore’s economy grew by 4%, accelerating from the 1.1% growth in 2023. The manufacturing sector grew by 4.2% y-o-y in Q4 2024, moderating from the 11.1% y-o-y growth in Q3 2024. For the full year, the manufacturing sector expanded by 3.5%, reversing from the 4.3% contraction in 2023. 

Recap of 2024: While economic growth and manufacturing activity was strong in 2024, CBRE Research observed that expansionary appetite by occupiers was muted amid cost pressures and supply chain challenges caused by the Red Sea crisis. With operational efficiency a key focus for occupiers, we observed more relocation deals as tenants right sized their real estate footprint while seeking premises equipped with modern specifications. Lastly, CBRE Research observed landlords gradually pivoting to an accommodative stance, resulting in a catchup in leasing activity towards the year-end.  

Prime logistics: Looking ahead, 2025 will see a peak in prime logistics supply, especially in the west region. With rents already in a consolidation phase since H2 2024, we expect older logistics facilities to come under pressure this year. However, the quality specifications of new assets this year could be attractive to occupiers, resulting in average rents holding firm. Landlords of older warehouses may contemplate redevelopments into modern prime logistics facilities, or they may have to offer more incentives to tenants. For occupiers, 2025 could be an opportune window to evaluate options on the market.  

Johor-Singapore Special Economic Zone (JS-SEZ): With the recent announcement of the JS-SEZ, industrialists could be the biggest beneficiary as they can access cheaper land and labour in Johor to gain a competitive advantage. However, this would also depend on each company’s operational requirements. While some smaller firms may adopt a wait-and-see approach until there’s more regulatory clarity, bigger firms are open to setting up a satellite warehouse in Johor while maintaining their core functions in Singapore to leverage the city-state’s infrastructure, stability, and skilled workforce.