According to real estate consultant Edmund Tie, the office climate in Singapore was relatively subdued in Q3 2020 as the majority of the workforce continued to work from home as a default venue from the COVID-19 pandemic.
Net office absorption continued to contract by 374,000 sq. ft, while the island wide office occupancy rate contracted by 0.3% points to 92.5%. Rents softened across the board, though premium grade buildings in Shenton Way/Robinson Road/Tanjong Pagar showed more resilience given their high specifications and efficient floor plates.
Conditions remained challenging in the retail sector, especially in Orchard/Scotts Roads due to the dearth of tourist arrivals. However, malls in the Fringe/Suburban areas fared better given their proximity to residential catchments and first-story rents saw limited declines.
In the industrial sector, demand was driven by the F&B, logistics and warehousing segments. Mr. Lam said: "Regulatory constraints continue to limit the dine-in capacity at various outlets. F&B operators have adapted by offering more food delivery and takeout options. Some of the bigger restaurant chains took up industrial space to consolidate their operations or house a central kitchen. As a result, there had been significant leasing demand originating from central kitchens."
There was also demand coming from logistics and warehousing on the back of robust demand coming from e-commerce services and stockpiling activities done by supermarkets.
Mr. Lam said, "While the overall outlook for the industrial sector is expected to brighten gradually as global manufacturing recovers, this progression is expected to be uneven across different sectors. For instance, rising online and groceries sales will incentivize retailers to stockpile and expand their warehouse facilities to cater to the increasing demand.
"In additional to economic factors, demand for industrial properties is also largely dependent on location and efficiency of floor plates. Industrial developments that are located close to transportation nodes and have efficient floor plates will therefore enjoy greater advantage in attracting tenants. Landlords of older developments could make use of this soft climate to upgrade their facilities, so that they can meet with the demand when the market recovers," he added.