SINGAPORE - The e-commerce and logistics sector accounted for 44 per cent - the biggest chunk - of occupied warehouse space in Singapore, according to a Colliers International report on Thursday (Oct 3).
The third-party logistics (3PL) and logistics sector comprise e-commerce firms, freight forwarders, transport agents, supply chain and logistics support companies, delivery services and storage services. 3PL providers offer outsourced logistics services.
Other warehouse occupiers are the manufacturing sector (30 per cent); distributors (10 per cent); food, chemicals and pharmaceuticals (6 per cent); oil, marine and energy (5 per cent); and IT and technology (5 per cent).
Tricia Song, head of research for Singapore at Colliers International, said: "Singapore is a top-class logistics hub with the world's busiest transshipment port, second busiest port in terms of total cargo tonnage handled, and the 12th busiest airport by cargo traffic as at 2018.
"As such, Singapore has been the location of choice for e-commerce players to establish their footprint when entering the region. The emergence of e-commerce in recent years has had a positive spillover to the 3PL and logistics sector in Singapore."
A newly released e-Conomy 2019 report by Temasek, Google and Bain & Company estimates South-east Asia's Internet economy to be worth US$100 billion by end-2019, with e-commerce taking the lion's share at US$38 billion. That represents an increase of almost six times from US$5.5 billion in 2015.
Colliers said regional trade and growth in e-commerce should channel to stronger warehouse demand in the long term and benefit the city-state given its logistics hub status.
However, the small market size as well as greater efficiencies in inventory forecasting and stock management could potentially moderate the need for drastic warehouse expansion, said Colliers.
The JTC rental index showed that warehouse rent has been on a downward trend for more than five years, with Q2 2019 rental index declining by 19.4 per cent from its peak in Q4 2013.
Colliers said this was possibly due to the influx of new supply averaging 6.3 million sq ft per year during the 2014-2018 period, bringing total warehouse stock to 117 million sq ft as at Q2 2019.
It does not expect a sustained oversupply of warehouse stock as Singapore's logistics hub status should benefit from both domestic and regional growth in e-commerce.
Colliers expects overall warehouse supply to ease, with annual expansion averaging 1.5 per cent of warehouse total stock over 2019-2023 versus 7.6 per cent for the previous four years over 2014-2018.
With new supply tapering off, it forecasts the overall vacancy rate to stabilise at 10.8 per cent in 2020.
There is about 117 million sq ft of total warehouse space in Singapore, and more than 80 per cent are located in the east and west regions.
Colliers also ranked micro-markets in these regions in the report, with Changi placing first followed by Tuas and Boon Lay/Jurong West.
Colliers' research team evaluated the logistics micro-markets against four criteria: presence of an existing logistics cluster and supporting infrastructure; availability of quality warehouse stock with consideration of both existing and future supply, as well as vacancy rate; accessibility to airport or sea ports; and rent premium compared to islandwide average.
Changi tops the list due to its proximity to Changi Airport, but it has limited warehouse space with unit sizes generally smaller than those in the west. Due to strong demand, this micro-market has the highest occupancy rate among major logistics locations in Singapore, said Colliers.
Tuas and Boon Lay/Jurong West both have a double-digit vacancy rate. However, Tuas will be home to the world's largest container terminal when a new mega port becomes fully operational beyond 2040, while Boon Lay/Jurong West will have the upcoming Jurong Innovation District and the future Jurong Regional Line.