DEMAND for warehouse space in Singapore hit a high in April 2022, with a record 212 rentals signed in that month fed by the food industry and businesses expanding inventory, according to real estate consultancy Knight Frank.

Occupiers were taking up space for food factories and central kitchens, as well as looking for warehouse space as stockpiling activity surged with lingering supply crunches and accelerating inflation.

“With rising global concerns on food security, as well as access to raw materials and necessities, stockpiling activity has increased,” said Daniel Ding, Knight Frank head of capital markets (land & building, international real estate & industrial), in a commentary on Thursday (Jul 7).

“The strengthening Singapore dollar provided support for stockpiling, mitigating escalation in costs as inflation becomes significant,” he added, which led to a higher demand for warehouse space as firms sought to expand inventories.

The 212 rental transactions recorded for warehousing space in April 2022 was the highest number of tenancies on a monthly basis since data became available. The cumulative median rental for warehouse rose to S$1.85 per square foot (psf) per month in April and May.

While leasing activity was robust during the month of April, total industrial tenancies signed in the second quarter shrank to 2,077 transactions - down 34 .1 per cent compared to Q1, and 39.6 per cent lower year on year.

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Overall sales of industrial space also slowed in the quarter. Ding noted that the total transactions for sale of industrial spaces in Q2 slipped 4.9 per cent quarter on quarter to S$661.5 million, and were down 30.2 per cent year on year.

More affordable multiple-user factory spaces continued to see healthy sales, pushing the average price up to S$439 psf.

Knight Frank put supply coming onstream between now and 2026 at 48.1 million sq ft of gross floor area. The Q2 report also noted an increase in sustainable initiatives, including the deployment of solar panels which will be mandatory for certain sites that meet requirements set by government agency JTC.

“Despite existing global and regional uncertainties, bright spots continue to highlight the industrial market,” said Ding, who expects prices and rentals for the industrial space to grow between 3 and 5 per cent this year.

“The persisting chip shortage globally will continue to generate demand for electronics, and the transport engineering cluster will benefit from the increased demand for air travel as travel accelerates in many parts of the world.”

*Amendment: An earlier version of the article incorrectly stated that multi-user factory spaces saw record high leasings. It is in fact, warehouses that had record leasings. The article has been amended to reflect correct data.