This Colliers-issued press release is published as is by Value Chain Asia.
Press ReleasesThe era of efficiency: Occupier priorities shaping the industrial market
6 May 20263 min read
Summary
- Singapore’s industrial rents and prices are still rising in early 2026, but a clear split is emerging between high-quality, modern assets (which retain strong demand and pricing power) and older properties that are increasingly under pressure.
- After years of growth, tenants are becoming more selective—prioritizing operational efficiency, flexibility, and readiness over sheer space expansion. This is reshaping demand across factories, warehouses, and business parks.
- While sectors like semiconductors (driven by AI demand) will outperform, broader manufacturing may slow amid uncertainty.
Singapore’s industrial market began 2026 on firm footing. Rents and prices continued to edge higher, but a clear shift is underway: occupiers are becoming more selective and operationally driven in how they choose space.
Headline figures in Colliers Industrial Insights for Q1 show continued growth with the JTC All Industrial rental index rising 0.4% and prices up 1.2% quarter-on-quarter, yet the real story is a widening performance gap. After 22 consecutive quarters of rental growth, occupiers are shifting their focus from pure expansion to operational efficiency. This is creating a clear split between modern, high-specification assets that retain pricing power and older, less flexible stock that is facing increasing pressure.
Catherine He, Head of Research, Colliers Singapore, notes, “Occupiers are now taking a more practical view of space, how quickly it can be operationalised, how efficiently it runs, and whether it supports future workflows. This scrutiny is widening the performance gap.”
This trend is playing out across all segments:
• Factories: A clear divergence is visible, with newer projects attracting demand from high-value sectors like precision engineering, while the broader market cools.
• Warehouse: Demand is steady, but tenants are prioritising efficiency. With no new prime warehouse supply until 2027, well-located assets are set to outperform.
• Business Parks: Performance is becoming cluster specific. While outlying locations have seen vacancy rise, strategic initiatives such as JTC’s planned AI park in one-north and LaunchPad @ PDD are expected to galvanise demand in core tech hubs.
Nicolas Menville, Executive Director and Head of Singapore based Industrial Clients at Colliers, adds, “The market’s multi-year upcycle has concluded; performance now hinges strongly on asset quality. For landlords of aging properties, this is a clear signal to reposition or risk obsolescence. For occupiers, it presents a strategic window to secure modern facilities that can enhance long-term operational resilience.”
Looking ahead, manufacturing growth is likely to be uneven: the electronics cluster is expected to outperform on robust semiconductor demand linked to AI investment, while other segments may see production cuts or deferred expansion amid supply disruptions and cautious sentiment. Some tenants are therefore reassessing or delaying leasing decisions in the near term, contributing to slower absorption despite healthy longer term demand drivers.
While trade and political turbulence is likely to persist into 2026, occupiers appear increasingly adaptable, restructuring supply chains to be more regional and durable. This should help sustain tenant activity and support steady, moderate rental and capital value growth over the medium term, alongside a widening bifurcation between high specification assets and older stock. REITs are also expected to introduce more assets with shorter lease tenures for sale as they recycle capital and rejuvenate portfolios.
Headline figures in Colliers Industrial Insights for Q1 show continued growth with the JTC All Industrial rental index rising 0.4% and prices up 1.2% quarter-on-quarter, yet the real story is a widening performance gap. After 22 consecutive quarters of rental growth, occupiers are shifting their focus from pure expansion to operational efficiency. This is creating a clear split between modern, high-specification assets that retain pricing power and older, less flexible stock that is facing increasing pressure.
Catherine He, Head of Research, Colliers Singapore, notes, “Occupiers are now taking a more practical view of space, how quickly it can be operationalised, how efficiently it runs, and whether it supports future workflows. This scrutiny is widening the performance gap.”
This trend is playing out across all segments:
• Factories: A clear divergence is visible, with newer projects attracting demand from high-value sectors like precision engineering, while the broader market cools.
• Warehouse: Demand is steady, but tenants are prioritising efficiency. With no new prime warehouse supply until 2027, well-located assets are set to outperform.
• Business Parks: Performance is becoming cluster specific. While outlying locations have seen vacancy rise, strategic initiatives such as JTC’s planned AI park in one-north and LaunchPad @ PDD are expected to galvanise demand in core tech hubs.
Nicolas Menville, Executive Director and Head of Singapore based Industrial Clients at Colliers, adds, “The market’s multi-year upcycle has concluded; performance now hinges strongly on asset quality. For landlords of aging properties, this is a clear signal to reposition or risk obsolescence. For occupiers, it presents a strategic window to secure modern facilities that can enhance long-term operational resilience.”
Looking ahead, manufacturing growth is likely to be uneven: the electronics cluster is expected to outperform on robust semiconductor demand linked to AI investment, while other segments may see production cuts or deferred expansion amid supply disruptions and cautious sentiment. Some tenants are therefore reassessing or delaying leasing decisions in the near term, contributing to slower absorption despite healthy longer term demand drivers.
While trade and political turbulence is likely to persist into 2026, occupiers appear increasingly adaptable, restructuring supply chains to be more regional and durable. This should help sustain tenant activity and support steady, moderate rental and capital value growth over the medium term, alongside a widening bifurcation between high specification assets and older stock. REITs are also expected to introduce more assets with shorter lease tenures for sale as they recycle capital and rejuvenate portfolios.
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