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SALE transactions of strata-titled industrial properties in the third quarter have fallen by about 36 per cent quarter-on-quarter to 203, according to caveats from URA Realis.
The fall is even more significant compared to the 672 strata-titled units that were sold in the same period last year, said DTZ.
So far, there has been 842 transactions this year. This is much lower than the 1,986 transactions registered in the same period last year.
DTZ on Thursday said the decline in transactions were due to fewer new launches, seller's stamp duty measures, as well as the implementation of the Total Debt Servicing Ratio (TDSR) framework last June.
DTZ said the figures signalled that demand for industrial space remained low in Q3 as recovery in the manufacturing sector stayed patchy.
The Singapore Purchasing Managers' Index (PMI) swung between expansionary and contractionary readings in July and August respectively, before reverting to a slightly expansionary reading of 50.5 in September.
DTZ said both average capital and rental values of conventional industrial space stagnated while business park rents continued to rise in Q3.
Cheng Siow Ying, DTZ's executive director of business space, said compared to office rents, the lower business park rents is drawing more office occupiers so the trend will last for some time. "The difference in rents can be as high as 30 per cent, compared with the average office rents in the decentralised areas."
She added that those occupiers comprise startup companies or office tenants strategically relocating to take advantage of lower rents, and information technology (IT) firms expanding their operations.
And downward pressure on rents for conventional industrial space might continue. This comes as a total of 40.7 million sq ft of industrial space is expected to be completed by 2016.
Between the second half of 2014 and 2016, 4.1 million sq ft of business park space is expected to be completed.
Lee Lay Keng, DTZ's regional head (South-east Asia) research, said the large supply in 2016 is "likely to restrain rental growth".
"The older business parks may find it increasingly difficult to retain and attract tenants alongside these newer business parks," noted Ms Lee. This could further exacerbate the two-way movement in rents between the newer and older business park buildings, she added.