Business & Economy Property Ecommerce logistics hub at Pandan Crescent sold for redevelopment

Ecommerce logistics hub at Pandan Crescent sold for redevelopment




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CBRE announced on August 1 that it has brokered the sale of 4 Pandan Crescent to LOGOS, which may be redeveloped into an ecommerce logistics hub. The transaction is subject to JTC Corporation’s approval.

Ms Brenda Ong, Executive Director of Industrial & Logistics Services, CBRE said, “Large sites in prime locations that can accommodate modern, ramp-up logistics facilities are limited. At 48,224 sqm, the site contains under-utilised plot ratio which offers immense potential for redevelopment into an ecommerce logistics hub. This is one of the first private sector-led initiatives by a third-party facility provider.”

She added: “We have observed growing interest among ecommerce players for integrated ecommerce logistics facilities that will increase efficiency, reduce operating costs and enhance flexibility.

“Such facilities could offer storage solutions, automated sortation and last-mile services such as self-collection and delivery – all under one roof. This is in line with the government’s plan to develop more ecommerce distribution centres as part of Singapore’s urban logistics network to cater to the projected growth in ecommerce.”

According to the World Bank international logistics performance index, Singapore is ranked 1st in Southeast Asia and 7th globally in 2018. With key infrastructure in place, strong logistics competency and high efficiency in customs clearance, Singapore is well-positioned as an ecommerce hub in Southeast Asia.

This development of Singapore as a logistics hub is crucial as ecommerce retail sales continue to grow in Singapore.

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Based on Euromonitor International statistics, Singapore’s ecommerce sales value has seen a 5-year CAGR growth of 18.6% y-o-y from 2013 to 2017 and is expected to grow by another 10.9% y-o-y from 2018 to 2022 to reach S$3.463 billion.

An earlier JLL report which referenced JTC’s latest quaterly report noted that Business Parks will be the star performer:

“The business park segment remained the star performer, standing out as the only industrial asset class to record rent growth for the fourth consecutive quarter. As of 1Q18, business park rents have recovered by 6.9% in the last one year. This was underpinned by steady demand amid the growth of the digital economy, lack of new supply as well as the filtered-through effect from the rise in office rents.
Demand continued to stem from qualifying users from the science, technology and media industries during the quarter. For example, we understand a technology firm took up more than 50,000 sq ft at a city fringe location in 1Q18 while another technology/ecommerce company is sourcing for additional business park space (also in excess of 50,000 sq ft) due to expansion needs.”

The JTC quarterly report released on July 28 said that the industrial property prices and rentals continued to stabilise in the second quarter of 2018. Although industrial prices fell 2.1 per cent from a year ago, they remain unchanged from the 1st quarter.

Industrial rents dipped to 4.1 per cent year-on-year, but the fall has stabilised with the rent falling by just 0.1 per cent quarter-to-quarter. Occupancy rates remain unchanged year-to-year, but fell 88.7 per cent, marking a 0.3 percentage points fall from the previous quarter. Transaction volume increased by 35 per cent from the first quarter, and 9 per cent year-on-year.

JTC’s report said that about 2 million sqm of industrial space, including 334,000 sqm of multiple-user factory space is estimated to come on-stream in the second half of 2018 and in 2019. This is an increase from the average annual supply and demand of around 1.7 million sqm and 1.2 million sqm respectively in the past three years.

The report card released by JTC today points towards an industrial property market that is steadily improving in health.

For the first time since 2Q15, the decline in prices finally halt to a brake for both single-user and multi-user factories in 2Q18 (JTC does not track warehouse price trend). Additionally, the multi-user factory segment has joined the business park segment in posting rent upside in 2Q18.

This is the first quarter of rent increase for the multi-user factory segment since 2Q15, and it has come on the back of a strong pick-up in leasing transactions to a record high of 2,148 contracts in 2Q18, according to JTC’s data which starts from 1Q00. This has likely been underpinned by the more upbeat business sentiment alongside the positive economic and manufacturing data, which has emboldened more tenants and industrialists to review their real estate options.

The business park segment remained the top performer as rents strengthened for the fifth straight quarter to bring the overall rental increase over five quarters to 7.5%. This came as a consequence of steady demand, the sustained growth in office rents and generally positive business climate.

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