Business Times: Sat, Mar 17
THE shoe-box factory has caught the national development minister's attention, and it's not all good.
Writing in his blog, Khaw Boon Wan said that shoe-box apartments serve a purpose as many singles do find them adequate for their housing needs. 'But shoe-box factories? As small as 50-80 sqm (smaller than a typical 7-Eleven shop)? Can a factory truly operate in such a small space?'
He noted that many tenants of shoe-box units in industrial parks are legitimate non-industrial tenants providing relevant support services to the industrial tenants for which the park is built. 'For example, some are staff canteens and in-house clinics serving the factory workers.
'However, there are some who appear to be unauthorised non-industrial tenants. They appear to be abusing the lower rentals at industrial land/parks for normal commercial/office activities which should rightly be in commercial land/sites. This is wrong.'
He said that offices and shops are not considered industrial use and are not allowed within industrial developments.
But he added that non-industrial activities such as child-care centres, staff canteens and showrooms are allowed within industrial developments, provided they support the main industrial activities and, together with lift lobbies and other circulation areas, do not occupy more than 40 per cent of the industrial development.
Mr Khaw concluded his blog post by putting the onus on developers and property agents, saying that they must make it clear to prospective buyers that industrial units can only be used for industrial activities.
'They must not mislead buyers into misusing industrial land/ parks for non-industrial activities,' he wrote.
When contacted, Dennis Yeo, Colliers International managing director, told BT that occupation by unauthorised non-industrial tenants stems from, among other things, a lack of affordable commercial space.
'It's really a mixed bag of issues. Unauthorised use of industrial land is not driven by the size of the unit. Unauthorised use in industrial land occurs because it is the cheaper option, and also because of the scarcity of cheap commercial and office space.'
He believes that the government must exercise caution in the event that it implements measures to curb the misuse of industrial land, stressing that the issue of commercial land shortage cannot be resolved overnight.
'There is a pressing need for more commercial space to be built and to cater to the small businesses as they cannot afford the rent at prime locations . . . but all this takes time.'
Nicholas Mak, head of research at SLP International, agreed, adding that the government must bear in mind the potential implications that policy changes might have on small and medium-sized enterprises (SMEs).
'In order for Singapore to be competitive and provide employment, you need SMEs, and they are vulnerable to economic changes and rising costs. If the government were to suddenly chase everyone out, where would they go? Some would close down . . . while other may go to Iskandar Malaysia and create jobs there.'
Another difficulty is how the government should go about facilitating the process of weeding out these unauthorised non-industrial tenants.
Mr Yeo said: 'The government cannot discriminate between the industries and industrial buildings as there would be repercussions. It cannot be enforced now and the enforcement cannot be phased. If not, everybody would be pleading to be put at the last phase.'
To solve the underlying problem of unauthorised non-industrial tenants thus requires addressing the fundamental shortage of commercial space, he said.
According to Mr Mak, the government can take a cue from the latest Industrial Government Land Sales Programme, where smaller parcels of industrial land were made available. 'One way is to sell smaller parcels of office space, perhaps in the city fringe area. Some suggestions include Toa Payoh or Braddell.'
To ensure consistency between commercial tenants and unauthorised non-industrial tenants who are taking advantage of the lower rental costs, the government could consider imposing a levy, tax or developmental charge, said Mr Mak.
Refining and expanding the present definition of what constitutes industrial activities could be another alternative, said Mr Yeo. 'You can widen the definition and redefine what is allowed under industrial use to include product life cycle. If you are involved at any point of the product life cycle, you can qualify under this definition.'
» Khaw hits out at rogue use of factory space
Straits Times: Sat, Mar 17
NATIONAL Development Minister Khaw Boon Wan put rogue industrial tenants and landlords on notice yesterday in his latest blog entry.
He said tenants are running some office and non-industrial activities in industrial buildings, looking for cheap rents by using industrial space instead of areas where they are supposed to operate.
The Straits Times has reported that shops, tuition centres and even churches were using these industrial areas because of lower rents.
For instance, Jalan Pemimpin's Clarus Centre houses five religious groups, including Hope Sanctuary, and tuition centre Twig. It is a similar scenario at Henderson Industrial Park, with non-industrial businesses like outfitter Costume City, travel agency Star Holiday Mart and Acts Baptist Church housed across both wings of Block 203.
The penalty for the unauthorised use of properties is a fine of up to $200,000 and/or jail for up to a year. Shops and offices should be located in commercial sites, such as in shopping malls, as this unauthorised use of industrial space could be leading to higher business costs.
Mr Khaw's post comes as many small and medium-sized enterprises (SMEs) and MPs are raising the issue of high industrial rents eating away at the bottom line of local firms and affecting their competitiveness.
Mr Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group, estimates that non-authorised tenants could contribute to higher rents in some areas and eventually price out genuine industrialists.
Mr Khaw said: 'The Urban Redevelopment Authority zones land to support industrial activities. The zoning helps to keep the industrial land cheaper than say commercial and office land, and thereby keeps our industries competitive.'
Industrial rent may be more than 30 per cent cheaper, SLP International research head Nicholas Mak said. For instance, while industrial rents can range from $1.50 to $3 per sq ft (psf), suburban office rents can range from $4 to $6 psf.
The proper use of industrial space includes manufacturing, warehousing and production. Certain types of e-businesses such as IT infrastructure and software development are also allowed.
There are exceptions. For instance, childcare centres and furniture showrooms are allowed within industrial developments as they support the main industrial activities if, say, parents need to leave their children at the centres. Broadly speaking, they may occupy about 40 per cent of the industrial development.
Industry observers say the rules should be enforced but tenants The Straits Times spoke to seem to be unclear about the rules.
The manager at Costume City, who declined to be named, believes the business is operating within the guidelines. About half the space is used as a showroom to rent out fancy dress costumes; the other half houses its office and warehouse.
Additional reporting by Yasmine Yahya, Gan Yu Jia and Yunita Ong
'Don't mislead buyers about units'
SHOEBOX factory units - between 50 and 80 sq m or from 538 to 861 sq ft - cannot accommodate genuine industrial activities, said National Development Minister Khaw Boon Wan in a blog posting yesterday.
The units may look cheap, and could tempt small-time investors scared off by high residential prices. But they could get a rude shock when they realise how small the units are.
The trouble with the so-called shoebox units is that there is not much in the way of industrial production possible in such a small space, experts note.
Mr Khaw said that those marketing such properties should make it clear to buyers that industrial units can be used only for industrial activities.
That tends to make it hard to find tenants, especially if the Government cracks down on illegal uses such as shops and tuition centres, experts add.
EL Development managing director Lim Yew Soon said investors make up about 30 per cent of buyers at his latest industrial estate, Eldix, in Mandai. Unit sizes start from about 1,600 sq ft.
Interest from investors has been growing ever since the Government slapped a series of cooling measures on the residential market, he noted. 'We always make sure that our buyers come in with their eyes open and will explain the restrictions of use to them. These restrictions are also listed in the sales and purchase agreement.'
Source: The Straits Times
單單是惹蘭柏民賓、Clarus Centre的其中一棟大樓，就可以從租戶指示牌上看到，有五個宗教團體落戶於此，這包括Hope Sanctuary、三一社區中心（Trinity Community Centre）和Victory Harvest Church。補習中心TWIG也是租戶之一。
國際產業顧問（International Property Advisor，簡稱IPA）總裁邱瑞榮表示：“我相信接下來市區重建局應該會更頻密地派人到一些工業大廈檢查，確保廠房沒有被濫用。對於提交上來的工業項目建築藍圖，它也應該會更嚴格地把關。”