Industrial rents inch up 0.5% in 2Q2026, reaching highest level since 1996

Overall industrial rents rose 0.5% q-o-q in 2Q2026, extending the 0.4% increase recorded in 1Q2026, according to JTC statistics released on July 23.

The index hit its highest level since 2Q1996, capping 23 consecutive quarters of growth since the trough during the pandemic in 3Q2020. Since then, rents have climbed 27.2%.

“Despite caution arising from the Middle East conflict, occupier enquiries remained resilient,” says Tricia Song, CBRE head of research of Singapore and Southeast Asia.

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Tridiana Ong, head of occupier strategy and solutions at Knight Frank, attributes the industrial property sector's resilience to ongoing global demand for AI-related products, which buoyed growth in both manufacturing and electronics.

The Purchasing Managers' Index (PMI) rose to 51.3 in June, extending its expansion streak to 11 consecutive months. Meanwhile, the electronics PMI outperformed the overall index at 52.2 during the same month.

Overview of price, rental, and occupancy rate movements in 2Q2026

Factory segments drive growth, business parks trail behind

Growth during the quarter was led by the single-user factory segment, which registered a 0.7% q-o-q in 2Q2026, easing from 1% in the previous quarter. Occupancy inched up by 0.1 percentage points to 89.3%.

Notable completions during the quarter included Advanced Substrate Technology’s AST Building and KLA-Tencor's facility at Ang Mo Kio Industrial Park 2.

Rents for multi-user factories followed closely behind, increasing by 0.6% q-o-q, up from 0.5% in 1Q2026. Occupancy for the segment edged up by 0.3 percentage points to 90.5%. The quarter’s sole completion was Space 18 — a six-storey, freehold food factory comprising 46 strata units and an industrial canteen.

Warehouse rents were also up 0.5% q-o-q during the quarter, while occupancy remained unchanged from 1Q2026 at 89.4%.

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Rents within the prime logistics segment were driven by ongoing high development costs and limited new supply, observes Catherine He, Colliers’ head of research.

"There are no new major prime logistics projects available for lease till 2027, although some space could come up from subletting at older projects as occupiers consolidate space — some third-party logistics players have been under pressure due to intense competition from in-house logistics players,” she adds.

In contrast, rents within the business park segment dropped slightly by 0.1% during the quarter, reversing from the 0.3% growth recorded in 1Q2026.

Still, occupancy at business parks accelerated to 77.9%, up from 76.7% in the previous quarter. According to Colliers’ He, this was attributed to excess space being absorbed as leasing demand was driven by technology and biomedical businesses.

Industrial property prices rise on sustained demand

Meanwhile, JTC's All Industrial Price Index continued to trend upward, rising 0.6% q-o-q and 3.8% y-o-y in 2Q2026.

CBRE's Song attributes the strong demand for industrial assets to a favourable interest rate environment. “While interest rates have risen from its trough of 1.02% in April 2026, they have remained low, offering investors of leasehold industrial assets stable income and positive carry amid geopolitical volatility,” she notes.

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Multi-user factory prices inched up 0.4% q-o-q in 2Q2026, while single-user factory prices rose by 1.1% q-o-q, reversing from the 0.1% decline in the previous quarter.

Lee Sze Teck, senior director of data analytics at Huttons Asia, adds that end-users are increasingly turning their attention to upcoming industrial developments. Most recently, Generations @ Tannery — a redevelopment of City Industrial Building — sold out within two days of its launch on July 17.

Tightening supply pipeline to support rents

Supply is expected to ease, with about 4.4 million sq ft of new industrial space — equivalent to around 0.7% of total stock — scheduled for completion in 2H2026.

Single-user factories account for 53% of the pipeline, followed by warehouses (46.9%) and multi-user factories (0.1%).

Against this backdrop, CBRE's Song expects the prime logistics segment to record steady rental growth over the coming quarters, as occupancy rates continue to rise with occupiers taking up available space within existing stock to support expansion plans.

That said, Colliers' He cautions that rental growth is likely to become increasingly bifurcated as occupiers grow more cost-conscious and slower to commit.

Rather than being driven by broad-based demand, future rental upside is expected to come from the backfilling of vacancies at recently completed developments, the renewal of older leases signed at lower rents, and stronger take-up at newly redeveloped, higher-specification assets.

Moreover, the flight-to-quality trend is expected to intensify, with modern, automation-ready facilities likely to command rental premiums, while older industrial assets face mounting pressure to remain competitive, adds He.

Colliers projects the All Industrial Rental Index to record a moderate annual growth of 1% to 3% in 2026, while industrial prices are expected to rise by 3% to 5%.