Savills Singapore observed that industrial leasing activity surged in Q2/2025, driven by occupiers prioritising operational flexibility, cost containment, and spatial efficiency, despite ongoing macroeconomic headwinds and policy uncertainty. Total leasing volume rose 7.6% year-on-year to 3,360 tenancies in Q2/2025, the highest quarterly total recorded since Q3/2021.
“Global supply chains are in a state of flux,” said Alan Cheong, Executive Director of Research and Consultancy, Savills Singapore. “Until tariff policy from major economies like the US is clarified, many firms are taking a wait-and-see approach. Yet essential industrial operations cannot pause indefinitely – hence the sharp rise in leasing activity, but with a shift toward agility and optionality.”
Unlike broader indices, Savills’ proprietary basket of private industrial properties revealed differentiated behaviour across sub-markets:
- Prime multiple-user factory rents declined 1.4% quarter-on-quarter (QoQ), as cost-conscious firms consolidated space or renewed leases at more competitive terms.
- Prime warehouse and logistics rents surged 4.3% QoQ, underpinned by sustained demand from e-commerce, manufacturing, and third-party logistics operators amid limited quality supply.
- High-spec industrial rents also showed signs of improvement, rising 2.1% QoQ, driven by demand in selected nodes with modern infrastructure.
“This quarter showed that while many occupiers are delaying large-scale commitments, they’re still making focused, tactical moves to optimise real estate portfolios,” Cheong explained. “We’re seeing active lease restructures, right-sizing, and relocations into more efficient facilities – especially where new fit-outs or capex can be avoided.”
Ashley Swan, Executive Director of Commercial & Industrial, Savills Singapore added, “Activity across most of Singapore’s industrial sectors has picked up, with occupiers actively surveying the market for opportunities. Notably, we’re seeing interest from new entrants looking to establish a presence in Singapore, reflecting the city’s continued appeal as a strategic hub. However, the overall sentiment remains cautious. Economic uncertainty and ongoing tariff concerns continue to weigh on decision-making. Cost remains a critical factor, and most occupiers require a robust, airtight business case before committing to a move.
Currently, the most notable momentum is coming from occupiers with smaller footprints. These businesses tend to be more agile, showing a greater willingness to commit to new leases – particularly when they can secure fitted spaces that require minimal modification.”
Savills Singapore notes that flexibility and optionality are now central to leasing strategies. Occupiers increasingly request shorter lease tenures, early termination clauses, or rightsizing provisions to mitigate future risk and preserve working capital. Many are also doubling down on flight-to-quality, securing better-performing space while new supply remains limited.
Looking ahead, renewals and strategic relocations are expected to remain a dominant theme throughout 2025, as firms hedge against trade volatility and maintain operational agility.
TABLE 1: Rental Forecast For Multiple-User Factory And Warehouse & Logistics Segments