Strata industrial sales in 1Q2026 declined 17.5% q-o-q to 335 deals — the lowest level since 2020 — with pricing diverging sharply by tenure, and freehold assets outperforming as investors opt for “longer-term value preservation”, according to Savills Singapore.
“The subdued turnover reflects continued buyer selectivity, with capital deployment largely concentrated in assets offering stronger fundamentals, longer-term value preservation or operational advantages,” says Savills’ industrial report on May 13.
That said, overall pricing held firm. Values of 30-year leasehold industrial assets edged down 0.6% q-o-q to $353 psf, while 60-year leasehold assets rose 1.4% q-o-q to $569 psf. Freehold industrial properties outperformed, rising 2.5% q-o-q to $876 psf.
JTC's multiple-user factory price index rose 1.7% q-o-q, which Savills says was supported by limited quality stock and steady demand for well-positioned assets.
Meanwhile, leasing volume eased 1.2% y-o-y to 2,867 deals during the quarter, based on JTC’s rental data. This excludes business park spaces and only comprises single- and multiple-user factory as well as warehouse spaces.
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Leasing demand remained selective rather than expansionary, says Savills, anchored by ongoing requirements from supply chain, e-commerce, advanced manufacturing and engineering occupiers seeking operationally efficient space.
Meanwhile, single-user factory vacancy fell to a three-year low of 10.8%, and multiple-user factories recorded net absorption of 654,000 sq ft, nearly doubling 2025's full-year net demand, and compressing vacancy to 9.8%.
The strong absorption highlights sustained occupier appetite for well-located, modern industrial premises, says Savills.
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Otherwise, warehouse demand was uneven across regions, says Savills. Islandwide warehouse vacancy edged up from 10.2% in 4Q2025 to 10.6% in 1Q2026. The North Planning Region saw vacancy rise 1.6 percentage points (ppts) to 17.5% in 1Q2026 — its highest level in eight years — despite no new completions, while vacancy in the West Planning Region rose 0.3 ppts q-o-q to 10.9% despite a concentration of new supply.
This uneven demand landscape across locations and asset classes is also seen in rental performance. Savills’ basket of prime warehouse and logistics assets rose 0.4% q-o-q to $1.83 psf, as prime multiple-user factory rents declined 1.4% q-o-q to $2.27 psf, reflecting greater occupier selectivity within the private factory segment.
“This divergence suggests that while broader industrial fundamentals remain stable, rental growth is likely to become increasingly asset-specific — favouring modern, specification-rich properties in strategic locations,” says Savills.
Meanwhile, business park vacancy rose marginally to 23.3% in 1Q2026, which the report largely attributes to new completions at Punggol Digital District (PDD).
JTC’s business park rental index recorded a modest 0.3% q-o-q increase in 1Q2026, while Savills’ standard business park rents recovered slightly, rising 0.6% q-o-q to $4.14 psf following a brief decline in the previous quarter. This is based on older clusters, ranging from 1,000 to 5,000 sq ft, with an average monthly asking rent of at least $3.50 psf.
Savills’ prime business park rents outperformed, increasing 4.4% q-o-q to $6.73 psf. This is based on newer clusters, ranging from 1,000 to 5,000 sq ft, with an average monthly asking rent of at least $5.50 psf.
In contrast, high-spec industrial rents continued to soften, declining 1.0% q-o-q to $3.90 psf, reflecting more cautious leasing sentiment in this segment. These are office-like industrial spaces, ranging from 2,000 to 4,000 sq ft, with an average monthly asking rent of at least $3 psf.
Ashley Swan, commercial and industrial executive director at Savills Singapore, says despite “increasing global uncertainty and further disruptions expected, the Singapore industrial market continues to exhibit resilience and overall stability”.
Swan adds: “Occupiers are likely to maintain a more cautious ‘wait-and-see’ approach to expansion unless necessary. This in turn should keep demand fairly subdued, but stable with the focus expected to remain on higher spec assets with longer tenures.”
Savills projects rental growth of 0% to 2% for multiple-user factories and business parks in 2026, and 0% to 1% for warehouse and logistics space. The firm expects the flight-to-quality trend to persist, with demand increasingly concentrated in modern, well-located, higher-specification assets and the performance gap between prime and secondary stock widening further.
Manufacturing stays in expansion
The manufacturing sector continued to expand through the quarter despite the Middle East conflict, notes Realion Group (OrangeTee & ETC).
The Singapore Purchasing Managers’ Index (PMI) rose 0.2 points to 50.5 in March this year from 50.3 in December 2025, marking the eighth consecutive month of expansion. Electronics PMI climbed to 51.4 in March from 50.9 in December 2025, marking its 10th straight month of expansion. Realion says this was “largely driven by global AI-related tailwinds and demand for semiconductors, AI hardware and data centre components”.
The broader manufacturing backdrop remained supportive, says Realion in its report on May 12. Around 1.4 million sq ft of gross floor area (GFA) was added to industrial stock in the quarter, with key completions including Smart Food @ Mandai and Stellar @ Tampines.
Based on planning approvals as of March 2025, around 8 million sq ft GFA of industrial space is expected to be completed from 2Q2026 to 4Q2026.
Looking ahead, the researchers “expect overall industrial rents to grow at a steady pace of 1%-3% in 2026”. They expect the electronics segment to “remain resilient” on the back of Economic Development Board investment, though they warn that the Middle East conflict could drive up energy and logistics costs, pressuring the supply side of the manufacturing sector.
