Singapore sets up shop for retailers in warehouses

Online retailers in Singapore are setting up new brick-and-mortar stores in industrial warehouses.

March 29, 2019

Online retailers in Singapore are setting up new brick-and-mortar stores in industrial warehouses, a sign that ecommerce is continuing to reshape both the industrial and retail property sectors.

The authorities in the city-state have started to allow companies more room to experiment in the use of warehouse spaces. The country’s Urban Redevelopment Authority (URA) said the approval is in recognition that businesses need the flexibility to help support core industrial activities and pilot new ideas.

Honestbee, a homegrown online grocery delivery start-up, became the first start-up to get the regulatory go-ahead to devote the maximum 40 percent allowable for ancillary use in industrial premises, to create a retail destination and canteen area for consumers, within its 60,000 square feet premises.

“The willingness of the government to be flexible in meeting new needs, along with the rejuvenation of older industrial properties either through upgrading or redevelopment could draw more investors to this asset class,” says Adrian Toh, senior director of industrial leasing and sales, JLL Singapore.

But many will “remain selective in their purchases given the short land tenures and the need to comply with the stringent rules and regulations of the government,” he says.

Warehouses have consistently been one of the hottest global real estate sectors in recent years, fuelled by retailers racing to satisfy consumer demand for timely deliveries.

In Singapore, this has sparked new requirements for space configurations and seen retailers, logistics service providers and landlords pump millions into purpose-built facilities.

In 2017, luxury ecommerce start-up Reebonz which is headquartered in Singapore, opened a new S$40-million eight-storey 200,000 square foot ecommerce hub in Tampines that is four times the size of its previous office and distribution centre.

In 2017, LVMH, one of the world’s leading luxury products group partnered with Bollore Logistics Singapore to set up an S$10 million automation facility that combines a multi-shuttle system and picking technology.

Habitat by Honestbee features innovations such as AutoCheckout, a cashless checkout system where shoppers can skip the queue and automatically pay for their purchases using beePay, and RoboCollect, a fully-automated robotic collection point.

“The government is not only supporting the growth of Singaporean start-ups, but also pushing firms to embrace new technologies such as automation, the Internet of Things, and Artificial Intelligence in order to raise productivity, and inject fresh innovative ideas into their businesses,” notes Doreen Goh, director of research & consultancy, JLL Singapore.

Industrial landlords are also investing in new fit outs to better cater to ecommerce needs.

Pan-Asian logistics group LOGOS acquired a site at Pandan Crescent last year for S$270 million with the intention to redevelop the property into a  six-storey ramp-up ecommerce-focused facility with ancillary office space.

“The ecommerce boom has transformed the way retailers conduct their business and given rise to new logistics and distribution requirements,” says Toh.