Tuesday, September 9, 2008

Ramp-Up Warehouses Offer More In Rental Returns

Source : The Business Times, September 9, 2008

RAMP-UP warehouse facilities may be relatively new in Singapore but rents show they can offer better investment returns.

According to a white paper by Colliers International, ramp-up warehouse facilities in Penjuru and Changi go for $1.30-$1.50 and $1.70-$1.80 psf per month respectively.

Multi-storey warehouse facilities with cargo lifts (upper floors) in the same vicinity go for $1.00-$1.20 and $1.40-$1.60 respectively.

Direct vehicular access to every floor in a ramp-up warehouse development effectively makes every floor comparable to a ground floor level unit, says Colliers.

'It therefore allows developers to charge ground floor rents for every unit in the development.'

In a conventional multi- storey warehouse, upper- floor units command lower rents than ground-floor units because users have to load and unload by cargo lift.

The rent differential can range from $0.20 to $0.50 psf per month depending on location.

Colliers says the opportunity to charge ground-floor rents for every unit on every level in a ramp-up warehouse development can raise rental revenue as much as 30 per cent at present.

'And in the future, when more industrial developments go high-rise, the rental gap could widen further.'

Colliers says that in Hong Kong, ramp-up multi- storey space is believed to command 40 per cent more than multi-storey space without ramps.

Tenants also benefit, it says. Service charges are about $0.20 psf per month lower than in a conventional multi-storey warehouse because cargo lifts use a lot of power and can require high maintenance.

Singapore now has about 13 million sq ft of ramp-up warehouse space, equivalent to 19 per cent of the island's 69.4 million sq ft of total warehouse space, according to Colliers.

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