Singapore industrial market set for ‘uneven growth’ in 2026

[SINGAPORE] Steady demand for high-spec manufacturing and logistics space kept Singapore’s industrial property market stable this year, but a flood of new supply amid ongoing global trade uncertainty could lead to significant moderation in certain sectors, analysts said. 

There was a small uplift in industrial rents, which rose 1.8 per cent in the first nine months of 2025, after rising 3.5 per cent for the whole of 2024 and 8.9 per cent in 2023.

“We expect 2026 to be a year of uneven growth, supported by structural tailwinds,” said William Tay, chief executive officer of the manager of CapitaLand Ascendas Reit (Clar), Singapore’s largest industrial real estate investment trust (Reit).

Global supply chains are adjusting to a new normal after the uncertainty stirred by protectionist policies and tariffs, while demand for high-tech, high-quality space and data centres will hold up growth, said market watchers.

Catherine He, Colliers’ head of research, said that after “20 consecutive quarters of rental increases, occupiers are becoming more cost-conscious”.

Cushman & Wakefield research head Wong Xian Yang observed rents continuing to rise moderately, with recovering business confidence and resilient demand for high-value manufacturing and logistics space, thanks to Singapore’s “favourable tariff differential” within the region. 

“Business parks, especially suburban business parks, which have underperformed in recent years, could surprise on the upside (amid) an acceleration in Grade-A office rents as the office market undergoes a tight supply situation from 2026 to 2027,” Wong added. 

Colliers’ He pointed to the “significant supply” of industrial space entering the market in the coming year: an average of 9.2 million square feet per year till 2029, versus the 8 million sq ft per year in the past five years. 

“This will broaden occupier options but may put pressure on rents, especially older stock,” she said. 

JLL Singapore’s head of logistics and industrial for capital markets Pamela Siow reckons that older business park stocks, particularly those with less competitive locations or limited amenities, will face “continued occupancy challenges and moderate rental growth”. 

“Asset repositioning will remain crucial, with landlords integrating AI (artificial intelligence), robotics and ESG (environmental, social and governance) capabilities to retain or attract tenants,” she said. 

“While opportunities in data centres, cold storage, and life science facilities will remain, landlords of legacy assets must be proactive, as incentives may be necessary to sustain occupancy levels.”

Clar’s Tay said that supply tapering in asset classes such as business parks from 2026 “should help maintain occupancy and rental stability”.

He pointed to emerging opportunities as data centre demand continues to outstrip supply, and financial services and advanced manufacturing firms seek facilities that can support AI workloads. 

In the prime logistics market, CBRE head of research for South-east Asia Tricia Song expects stronger rental growth, given notably lower supply in the immediate pipeline: Around 0.8 million sq ft of new space is coming on stream next year, from 2025’s 5.6 million sq ft. 

Cost-conscious occupiers

The steady rental growth has, however, made occupiers more cost-conscious, said Colliers’ He. 

“Coupled with the global trade uncertainty and tariff risks, many firms are more likely to delay their long-term commitments, opt for shorter flexible leases, consolidating footprints and seeking fitted space or landlord capex support.”

More landlords are offering longer rent-free periods and fit-out incentives to attract tenants, especially at older facilities, she added. 

Beyond rents, Michael Loo, senior director of industrial and logistics at JLL Singapore, said rising construction and compliance costs, especially for ESG-certified features in new industrial developments, are increasingly passed on to tenants.

Even so, demand from logistics services and supply chain management firms has been “exceptionally resilient” this year, said Graeme Bolin, CBRE’s head of occupier and leasing for industrial and logistics services in Singapore.

“Inquiries by technology occupiers are still active, even though (they have) dropped out of the top three this year,” said Bolin. “(And) while requirements by food and cold store operators for temperature-controlled facilities are in a consolidation phase, we are expecting activity to pick up in 2026.” 

Colliers’ He said third-party logistics providers (3PLs) and the advanced manufacturing and biomedical sectors led demand. “Occupiers are increasingly prioritising modern specifications, focusing on energy and operational efficiency with the rise of automation and with AI firms setting up in business parks.” 

This has resulted in a more polarised market, where new logistics and high-spec assets see deeper and more institutional occupier bases, while older assets rely on incentives, flexibility and repositioning to stay relevant, she said. 

Jai Mirpuri, head for South-east Asia at ESR, a leading industrial asset manager, noted that 3PLs have lately consolidated various warehouse spaces into prime logistics facilities to improve operational efficiency.

But as a whole, he said leasing inquiries remained moderate amid the cautious manufacturing sentiment, with many firms taking a measured approach to expansion.

Meanwhile, Knight Frank’s head of occupier strategy and solutions Tridiana Ong said the general manufacturing sector struggled, as rising sophistication in Singapore’s industrial landscape and mounting cost pressures compelled some to exit.

The Johor-Singapore Special Economic Zone may, however, open opportunities for some to offload cost-sensitive functions across the border while retaining key services in Singapore, she said.  

On the supply side, Chua Yang Liang, JLL’s head of research and consultancy for South-east Asia, pointed to a flurry of new purpose-built logistics and warehouse completions this year.  

Three “significant” multi-tenanted logistics warehouse developments also opened for leasing: Boustead’s 36 Tuas Road warehouse in Jurong Industrial Estate; the redeveloped Mapletree Joo Koon Logistics Hub in Pioneer; and Clar’s 5 Toh Guan Road East near the upcoming Jurong Lake District. 

Islandwide occupancy has held steady at 89.1 per cent, showing “sustained demand” even as net new supply climbed to 6.3 million sq ft for the first nine months of 2025, from 5 million sq ft for the whole of 2024, said Dr Chua. 

Meanwhile, amid the supply boost, occupancy rates for prime logistics properties dipped to 93.6 per cent in the third quarter, from 95.5 per cent in Q4 2024.

Song said modern ramp-up logistics facilities had a higher occupancy rate of 89.6 per cent in Q3, fuelled by demand from major 3PLs. 

Increased investment activity

Industrial asset prices trended upwards in 2025, outperforming rent growth as investor appetite improved. For 9M 2025, the price index rose 3.6 per cent, outperforming the 3.5 per cent gain for the whole of 2024.

“The decline in interest rates in 2025 has boosted investor sentiment, further reinforcing the appeal of quality industrial assets due to its stable returns and favourable yield spreads,” said Song. 

Industrial investment volumes total S$4.1 billion in the year to date, according to Colliers, on track to meeting 2024’s record of S$5.6 billion. Song noted that the current level is also higher than the three-year average of S$3.8 billion from 2022 to 2024. 

Knight Frank’s Ong reckons that the investment market will gain further momentum in 2026, as a “greater range of investible assets move into positive carry territory”. 

Reits and institutional investors jumped in as financing costs fell. In the year to date, industrial Reits have made around S$2.5 billion in acquisitions and divestments. This is around half of 2025’s overall volume of S$4.58 billion, and surpasses the previous year’s S$2.2 billion, said Song. 

Tay said Clar remains committed to “enhancing portfolio quality through disciplined capital recycling and accretive acquisitions in growth segments such as technology, logistics and biomedical sciences”.

Notable transactions this year include its divestment of five properties for S$329 million, and Mapletree Industrial Trust’s sale of three properties to Brookfield Asset Management for S$535.3 million. 

Developer Soon Hock Group bought Ching Shine Industrial Building in Tai Seng for S$113.2 million, while MacPherson Industrial Complex was sold for S$103.9 million to an undisclosed buyer in May. NTUC Fairprice Co-operative divested 680 Upper Thomson Road for S$351 million to a consortium led by the family behind Oxley Holdings. 

Said Siow: “Overall, developer and end-user appetite for new sites remains healthy, thanks to limited available supply from JTC and confidence in strata industrial sales.”

She expects a similar or even greater level of supply next year, with additional focus on supporting newer user groups such as self-storage and food manufacturing. 

Colliers’ He added that strategic locations connected to new business-white sites and mixed-use industrial districts, such as Jurong, Tuas and Woodlands, will offer long-term growth potential and diversification into integrated industrial ecosystems.