Vacancy rate of factories, warehouses jumped to 7.1% in Q2

Blame it on wider supply-demand gap.

According to Savills, the vacancy rate for factories and warehouses suffered a quarterly increase from 6.6% in Q1/2013 to 7.1% in Q2/2013 as the gap between net supply and net demand increased almost four-fold from 603,000 sq ft in Q1/2013 to 2,368,000 sq ft in Q2.

Here's more:

The cumulative leasing volume for Q2/2013 reached a new historical high of 1,981 deals, which we believe consist predominantly of tenancy renewals. 

Transaction volumes grew 30.9% QoQ and exceeded the previous quarterly record of 1,732 deals set in the same period last year. The recent pick-up in the manufacturing industry was one of the key reasons behind this record-breaking number of leasing deals.

Although leasing transactions increased, rental rates remained flat in Q2/2013. The monthly rents of both upper-storey factory and warehouse units were S$2.00 per sq ft. High-tech units also maintained their rates at S$3.00 per sq ft. The status quo was due to the oversupply situation in the industrial property market and cost pressures on tenants.

However, we did not see a decrease in rental rates as landlords still looked to maintain the rental yields of their properties while tenants had difficulty in finding similar alternative premises at rents low enough to outweigh relocation costs, among other factors.