Priced Out Of CBD, Firms Snap Up JTC Factory Space

Source : TODAY • Wednesday • August 1, 2007

EDB poll also shows manufacturers are wary about H2 business climate

JTC has benefited from the office sector crunch as businesses priced out of the traditional corporate space seek out new locations to house their operations.

According to JTC’s latest quarterly figures released yesterday, demand for JTC flatted factory space grew 2.5 per cent to 1.11 million square metres (sq m) in the second quarter of the year. Supply was unchanged at 1.417 million sq m, pushing occupancy rate 2 percentage points up to 78 per cent over the first three months of 2007.

The data also showed that occupancy of technopreneur space — or facilities specially designed for technology-based activities — reached a high of 85 per cent during the same period, a 14-percentage-point rise from the quarter before.

“There is high demand coming from the office sector, where backroom operations are being moved towards lower cost facilities away from the business districts,” said Mr Dominic Peters, director of industrial, Savills Singapore.

Mr Donald Han, managing director of Cushman & Wakefield, agreed: “Tenants who cannot afford the office rentals are moving to fringe areas like Kallang and Henderson. The main beneficiaries are the business parks and industrial properties.”

For the second quarter, JTC’s net allocation of ready-built facilities, including flatted factories and business parks, climbed to 58,200 sq m, up from 6,700 sqm in the first quarter.

Yet Mr Han said: “Occupancy levels are higher for most centralised industrial space like those in Henderson and the Lower Delta areas (where) we’re seeing 90- to 93-per-cent occupancy.”

Technopreneur@Bukit Merah reached full occupancy and business park space on the whole enjoyed a high 93-per-cent occupancy rate, JTC said.

Meanwhile, the Economic Development Board said its second quarter business confidence survey showed manufacturers were less optimistic about business conditions for the second half of this year.

The EDB surveyed 381 manufacturing companies for their business expectations. A net-weighted 22 per cent forecasted better conditions in coming months — a slight decline from the 26 per cent in the previous quarter.

This easing of sentiment is apparent in a couple of manufacturing clusters. Electronics companies’ positive sentiment moderated from 38 per cent a quarter ago to 34 per cent, while precision engineering firms slid from 24 per cent to 12 per cent.

For manufacturers in the transport engineering,chemical and biomedical manufacturing clusters, expectations remained largely at the same level.

The general manufacturing industries, especially the food, beverages and tobacco, and miscellaneous industries, displayed stronger sentiments as consumer spending and the construction sector performance stays strong.

More than half the firms surveyed said there are no limiting factors affecting their ability to get more export orders. Of the 43 per cent that felt otherwise, 28 per cent cited price competition from overseas competitors as the biggest factor. Other limiting factors cited included raw material and hiring constraints.