Singapore IndustrialSingapore strata factories and warehouses sales dropped in first quarter of 2015 by 307 units, representing a drastic fall of 42.4% on quarterly basis and 41.2% drop for year-on-year basis, according to Savills Singapore data.

The negative sentiment was associated with increasing labour costs, Singapore’s poor manufacturing performance, weak commodity prices and uncertainty over US Federal Reserve’s interest rate hike.

During the first quarter, upper-storey factory and warehouse units prices plunged by 3.2% on a quarterly basis for S$463 per sq ft with 60-year leasehold units, while the freehold units, a 2.3% drooped for S$658 per sq ft.

Despite of recent market’s slump sentiment, leasing transactions increased 1,868 by 6.6% in first quarter of 2015 from 1,752 deals recorded in the same period a year ago. Unit prices with 60-year leasehold also slightly increased by 0.6% on a quarterly basis, from S$375 to S$377 per sq ft.

According to Savills, the slight increased in leasing deals may happened from newly-completed development and pre-commitment leases on many upcoming development.

However, the slide of pipeline matched with the latest available stock has made leasing market increasingly competitive with landlords and forced to reduce rental expectations to secure their tenants. As a result, monthly rents dipped by 5% to S$1.85 per sq ft from S$1.95 per sq ft in the previous quarter.

The high vacancy rate was achieved in Q4 2014 considering the new supply around 1.56 million sq ft from completed projects in Science Park, Changi Business Park and  One-North.

Landlord must offer industrial spaces competent of satisfying the demands of businesses and thriving industries, including the B1 Industrial development Proxima @ Gambas and B2 industrial at Loyang Way, Loyang Enterprise Building.