KDC is working on converting the office space (16% of the NLA) at KDC SG 5 into a DC. The management is in the process of getting the required approvals to bringing more power onsite, and well as securing customer commitments in advance.
Demand for DCs remains strong and the supply coming onto the markets that KDC has a presence in is expected to slow. In Singapore, a slowdown in DC approvals is likely as the government attempts to strike a balance between its pledge to reduce carbon emissions and the importance of DCs within the economic infrastructure. Lack of supporting infrastructure (substations) in Dublin is the kink in the pipe. It increases the cost of building new DCs as the developers will have to incur the cost of building the supporting infrastructure. Lack of supply coming onto the market will help to push rents up. However, we note that only a small percentage of leases will expire in 2019/2020 (2.4%/4.9%), as such, the uplift from increasing rents will not be as pronounced. A more significant 16.3% of rents will expire in 2021.