Knowledge Hub

• A worldwide shortage of available power is inhibiting growth of the global data center market. Sourcing enough power is a top priority of data center operators across North America, Europe, Latin America and Asia-Pacific. Certain secondary markets with robust power supplies stand to attract more data center operators.

• New development is occurring across all four regions despite limited power availability. Northern Virginia remains the world's largest data center market with 2,132 megawatts (MW) of total inventory.

• Despite new development, vacancy rates are declining in all four regions due to strong demand. Singapore—the world’s most power-constrained data center market—has less than 4 MW of available capacity and a record-low vacancy rate of less than 2%.

• Large corporations are finding it increasingly difficult to find enough data center capacity. Low supply, construction delays and power challenges are impacting all markets. For example, Querétaro, Mexico, has only 1.2 MW available for lease.

• The worldwide shortage of available supply is leading to price increases for data center capacity. Singapore has the highest rental rates at $300 to $450 per month for a 250- to 500-kilowatt (kW) requirement, while Chicago has the lowest at $115 to $125.

• The rapid growth of artificial intelligence—along with other modern technologies, such as streaming, gaming and self-driving cars—is expected to drive continued strong data center demand. This will spur innovations in data center design and technology as operators aim to deliver the capacity that meets the increased power density requirements of high-performance computing.

This report was originally published in https://www.cbre.com/insights/reports/global-data-center-trends-2023

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Q2 2023 Singapore Figures report provides the latest commentary and data on net absorption, rents, vacancy, supply and other key metrics in Singapore's office, business parks, retail, residential and industrial markets, along with an analysis of real estate investment activity.

Executive Summary

Office: With a low prevailing vacancy level, gross effective rents for the Core CBD (Grade A) market increased marginally by 0.4% q-o-q.

Business Parks: Leasing activity was focused on renewals as occupiers exercised more caution due to rising global macro economic headwinds. Selected tech and R&D industries gave up space in Q2 2023.

Retail: Prime retail rents for all submarkets rose further in Q2 2023, supported by the continued recovery of the Orchard Road, City Hall/Marina Centre and Fringe areas, and the resilience of the suburban market.

Residential: Private home prices declined for the first time in three years after cooling measures.

Industrial: Prime logistics rentals have grown by 8.6% in H1 2023, despite a weak macroeconomic backdrop mainly due to limited supply.

Investment: Preliminary real estate investment volumes in Singapore for Q2 2023 declined 44.1% q-o-q and 64.3% y-o-y to $3.495 bn, mainly on sharp falls in retail and office asset sales.

This report was originally published in https://www.cbre.com.sg/insights/figures/singapore-figures-q2-2023

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On 4 July 2023, the Lease Agreements for Retail Premises Bill ("Bill") had its first reading in Parliament. The Bill seeks to make it mandatory for retail lease contracts to comply with the Code of Conduct for Leasing of Retail Premises in Singapore ("Code").

The Code was issued by the Fair Tenancy Pro Tem Committee in 2021 and was last updated in 2022. It sets out guidelines and principles for landlords and tenants of qualifying retail premises to enable fair and balanced lease negotiations. The full Code is available here.

The Bill serves the following functions:

• Establishes the Fair Tenancy Industry Committee;
• Provides for the Code and the obligations of landlords and tenants in relation to the leasing principles contained therein; and
• Establishes a dispute resolution process in relation to complaints of non-compliance with the leasing principles or obligations.

The introduction of the Bill follows a public consultation on the proposed legislation held by the Ministry of Trade and Industry from 18 July 2022 to 5 August 2022.

While adoption of the Code has thus far been voluntary, the Bill – when passed – will require compliance with the Code's leasing principles. Landlords and tenants of retail premises should thus be aware of their obligations under the Code to ensure compliance.

This Update highlights the key features of the framework set out under the Bill and the Code.

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Despite ongoing economic uncertainty, logistics occupiers in Asia Pacific maintain a positive business outlook for the next three years. Expansionary demand continues, although appetite has weakened slightly compared to 2021, with occupiers shifting their focus toward optimising their operations.

CBRE’s 2023 Asia Pacific Logistics Occupier Survey features insights from more than 120 logistics real estate executives in the region on their business outlook, growth plans, strategic opportunities and concerns for the next three years. Key findings include:

Market Sentiment

• 81% of respondents are confident about their business outlook for the next three years.
• Expansionary appetite weakened from 78% in 2021 to 68% this year.

Supply Chain

• Warehouse automation is seen as integral to logistics operations; Automated storage and retrieval systems remains the most sought after logistics technology.
• 87% plan to outsource more or the same amount of operations to 3PLs to enhance operational efficiency.

Portfolio Strategy

• Modern logistics assets near customers and public transport are the most sought after, especially those in urban areas.
• Short-term leases and/or flexibility for expansion ranked as the most important element of future lease management.

ESG Considerations

• ‘Green energy supply’ and ‘Electric Vehicle charging stations’ are the most desirable features for future-proof warehouses.
• 51% expressed an interest in green certified warehouses.

This report was originally published in https://www.cbre.com/insights/reports/2023-asia-pacific-logistics-occupier-survey

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