Navigating Singapore’s Industrial Transformation in 2025

The industrial‑property sector in Singapore is undergoing a pronounced transformation in 2025. The market is no longer driven purely by space absorption and rental movements; rather, demand is increasingly shaped by technology adoption, supply‑chain resilience and sustainability imperatives. As evidence of the sector’s underlying strength, transaction activity in Q2 2025 soared to S$1.44 billion^[1] - more than six‑fold the amount recorded in Q1. Meanwhile, while macroeconomic headwinds persist, rental growth has been observed across several property types. For example, prime warehouse and logistics rents rose 4.3% quarter‑on‑quarter in Q2 2025. This moment of transition offers investors and occupiers an opportunity: those who align with the emerging themes of high‑specification space, automation readiness, strategic land policy and ESG integration will be better positioned in Singapore’s industrial property market.

Demand‑Side Evolution: Catalysts for Industrial Property Shifts

E‑commerce Acceleration & Last‑Mile Delivery

The explosion of e‑commerce continues to reshape industrial demand in Singapore. With online grocery, food delivery and consumer parcel demand all increasing, the absorption of urban logistics and last‑mile fulfillment space is rising. Occupiers are seeking micro‑fulfilment centres and multi‑user logistics hubs closer to population centres for faster delivery turnaround. In Q2 2025, leasing volume rose by 7.6% year‑on‐year to 3,360 tenancies^[2] - the highest quarter since Q3 2021, reflecting the growing urgency among occupiers to adapt their space portfolios. Firms are now prioritising space that supports seasonal surges, higher return rates and more complex fulfilment models. This demand is pushing up rents for modern logistics stock while older, less accessible industrial space faces greater risk of obsolescence.

Advanced Manufacturing & Industry 4.0/5.0

Singapore has explicitly targeted manufacturing value‑added growth of roughly 50% from 2020 to 2030, pulling in high‑tech sectors such as electronics, aerospace, biomedical science and precision engineering. As a result, demand is rising for “smart” facilities - industrial buildings that can support IoT, big data analytics, robotics, high‑power loads and clean‑room capabilities. Tenants are increasingly seeking built‑in automation readiness: higher floor‑load capacity, increased ceiling height, raised floors, enhanced mechanical & electrical systems. These requirements sharply reduce the suitability of older, standard industrial stock and place a premium on new‑generation, high‑specification facilities.

Supply‑Chain Resilience & Diversification

Global disruptions in logistics and trade have encouraged firms to diversify their supply chains (“China‑plus‑one” strategies), hold higher inventory buffers, and position manufacturing and distribution assets closer to stable and well‑connected hubs. Singapore’s role as a regional logistics node, supported by road, port and air connectivity, means that its industrial property market is benefiting from this shift. Occupiers are no longer only assessing cost per square foot, they are assessing how real‑estate location and specification contribute to resilience, agility and response capacity in a disrupted world.

Data Centre Growth

Within the industrial‑property market, demand for data‑centre and specialised infrastructure is increasingly prominent. The Asia‑Pacific region is projected to overtake the U.S. in co‑location data‑centre activity before 2030, and Singapore remains a central hub. This creates a niche but high‑value demand stream for industrial land and facilities that can meet high‑ceiling, high‑power, high‑cooling loads. While policy controls (such as moratoria on new data‑centre land) exist, the trend signals that industrial property investors need to consider digital‑infrastructure demand alongside traditional manufacturing and logistics.

Supply‑Side Response: Modernisation and Strategic Land Management

Shift to High‑Specification & Grade A Facilities

On the supply side, the market is responding: developers and landlords are increasingly delivering Grade A, high‑specification industrial product. According to market reports, in H1 2025 the share of Grade A space in demand was approximately 55 %^[3]. The supply pipeline is similarly skewed toward higher‑specification developments: in Q2 2025 prime warehouse and logistics rents rose 4.3% QoQ^[4]. Multi‑storey ramp‑up warehouses with elevated ceiling heights, stronger floor loading and automation‑friendly design are now more prevalent. This shift reflects occupiers’ requirement for future‑proof infrastructure rather than simply the lowest‑cost space.

Strategic Land & Lease Framework Enhancements (JTC Corporation)

The government land‑developer has refined its frameworks to better match evolving industrial needs. For example, JTC has begun offering longer lease tenures on green‑field industrial land allocations to allow developers greater development horizons. It has also introduced more flexible lease‑extension schemes and earlier renewal windows. Moreover, JTC now recognises investments in innovation, R&D, digitalisation and IP creation as part of its plant & machinery (P&M) definition for lease‑renewal eligibility. These measures encourage higher‑value industrial development and give tenants and investors greater certainty in land tenure and redevelopment potential.

Limited New Supply in Specific Segments

Despite rising demand for high‑specification space, supply in certain segments remains constrained. Reports show that incoming supply in the multi‑user factory segment remains below its ten‑year historical average^[5]. Meanwhile, prime logistics developments are often heavily pre‑committed (for example, 50% pre‑committed at Mapletree Joo Koon Logistics Hub). This constrained supply in quality stock supports rental growth and tenant‑selectivity favouring newer product.

Asset Enhancement Initiatives (AEI)

Existing older industrial buildings are undergoing asset‑enhancement programmes to maintain competitiveness. Upgrades include higher ceilings, improved M&E, increased power loads, better accessibility, improved building‑façade and sustainability features. This trend enables landlords to reposition assets rather than rely solely on ground‑up new supply.

Technology Integration: Driving Efficiency and Value

Automation & Robotics

The adoption of automation and robotics is mainstreaming across manufacturing and logistics. Industrial buildings must now support technologies such as Automated Guided Vehicles (AGVs), Automated Storage and Retrieval Systems (ASRS) and robotic picking systems. These technologies impose strict building‑spec requirements: flat floor finishes, high clear‑height, large mechanical loads, sufficient power capacity and seamless internal circulation. Buildings that can’t meet these specifications risk becoming obsolete.

Artificial Intelligence (AI) & Machine Learning (ML)

AI and machine‑learning technologies are being used to drive productivity gains, support predictive maintenance, optimise production lines and enable real‑time decision‑making. In Singapore’s manufacturing sector, AI adoption is expected to contribute significantly to sector‑value growth and wage uplift. Buildings and facilities must therefore provide the data‑and‑connectivity infrastructure to support these platforms, enhancing value for both occupiers and landlords.

Internet of Things (IoT) & Sensors

IoT sensors and real‑time monitoring systems are being deployed across manufacturing and logistics assets to track machine‑performance, environmental conditions, occupancy, energy usage and asset‑health. Facilities that enable integration of IoT systems provide tenants greater operational visibility and landlords enhanced asset‑management capability.

Digital Twins & Data Analytics

The use of digital‑twin models - virtual replicas of physical assets - allows facility operators and landlords to simulate operations, optimise workflows, manage building life‑cycles and reduce operational risk. As data analytics becomes more embedded in real‑estate operations, assets with stronger data‑capability will command premium valuations and greater tenant interest.

Sustainability (ESG) as a Core Investment and Occupier Criterion

Growing Investor & Occupier Demand for Green Buildings

Globally, investors are increasingly applying ESG criteria to their real‑estate portfolios. In Singapore’s industrial property market, occupiers are asking for green‑building certifications (e.g., BCA Green Mark), energy‑efficient systems, and “green lease” clauses. Assets with strong sustainability credentials are viewed more favourably from financing, tenant‑demand and regulatory standpoints.

Regulatory Push for Sustainability

Singapore’s Green Plan 2030 sets targets for greening 80% of buildings by 2030, and the Building and Construction Authority (BCA) Green Mark scheme is a key tool. Large listed companies and REITs will face mandatory climate‑reporting by FY 2025/2027. Meanwhile, carbon tax is scheduled to rise, incentivising higher efficiency: the rate is S$5/tCO₂e in 2023, increasing toward S$50‑80/tCO₂e by 2030. These factors drive occupier and owner demand for greener industrial buildings.

Benefits of Green Industrial Properties

Green industrial assets deliver cost‑savings (energy, water), appeal to sustainability‑conscious tenants, improve asset marketability and mitigate regulatory risk. These benefits translate directly to stronger asset performance and future‑proofing.

Green Lease Clauses

Green‑lease clauses are becoming more common, aligning landlord and tenant commitments on sustainability – covering energy‑usage targets, waste‑management protocols, and data‑reporting obligations. Tenants in high‑specification space are increasingly requesting flexibility to manage sustainability metrics themselves.

Seizing Opportunities in a Transformed Industrial Landscape

Recap of Key Trends

The industrial‑property market in Singapore is being reshaped by technology, supply‑chain strategy, high‑specification supply and ESG imperatives. The dramatic investment surge in Q2/2025^[6] (S$1.44 billion) underscores the growing institutional confidence in this sector. Occupiers are increasingly seeking assets that support advanced manufacturing, logistics, automation and sustainability. Land‑developers and investors are responding with upgraded products, longer lease frameworks and strategic clustering.

Strategic Imperatives

For investors: focus on high‑specification assets that are automation‑ready, data‑capable and sustainability‑certified. Limited new supply in certain segments implies a structural opportunity for premium space. For occupiers: prioritise location, building specification and lease flexibility rather than simply cost. Seek assets that enable your operational strategy, whether manufacturing, logistics or data‑infrastructure. Engage early with landlords or developers who understand the changing requirements.

Future Outlook

Singapore’s industrial‑property market is well‑positioned. The city‑state’s strategic global connectivity, stable regulatory environment and evolving land‑frameworks (via JTC) all point to continued demand for premium industrial stock. While macroeconomic uncertainty remains, the structural drivers of automation, e‑commerce expansion, supply‑chain resilience and sustainability are long‑term. Those who move early will capture selective opportunities before competition and pricing fully reflect them.

^[1] Source: Savills Singapore. https://www.savills.com.sg/insight-and-opinion/savills-news/223705/industrial-investment-surged-six-fold-in-q2-2025-despite-overall-decline-in-investment-sales

^[2] Source: Savills Singapore. https://www.savills.com.sg/insight-and-opinion/savills-news/224183/q2-2025-leasing-demand-climbs-as-occupiers-seek-flexibility-and-efficiency-in-industrial-space--savills-singapore

^[3] Source: Savills Singapore. https://www.savills.com/research_articles/255800/222852-1

^[4] Source: Savills Singapore. https://pdf.savills.asia/asia-pacific-research/singapore-research/singapore-industrial/singapore-industrial-briefing-q2-2025.pdf

^[5] Source: Savills Singapore.  https://pdf.savills.asia/asia-pacific-research/singapore-research/singapore-industrial/singapore-industrial-briefing-q2-2025.pdf

^[6] Source: Savills Singapore. https://www.savills.com.sg/insight-and-opinion/savills-news/223705/industrial-investment-surged-six-fold-in-q2-2025-despite-overall-decline-in-investment-sales