URA has stepped up their checks since last year on possible misuse of industrial space by breaching the 60 -40 rule.
Even developers have not been spared the rod.
Midview Development and Sin Soon Lee Realty are the two developers that have been warned. Both set up their office in a strata industrial building they developed.
Industry sources said this practice was not uncommon among small firms, including industrial developers. However, it goes against a URA “60-40” rule which effectively forbids the use of industrial units as pure offices.
The rule stipulates that each strata unit in an industrial development must devote at least 60 per cent of the total floor area to core industrial activities such as manufacturing, assembly and repair workshops or warehouse and storage facilities.
The other 40 per cent may be used for supporting purposes such as ancillary offices, staff canteens and showrooms.
This is meant to ensure that industrial land is used predominantly for industrial activities.
Midview Development is also the developer of 60-year leasehold Midview City where the URA last year cracked down on unauthorised use of industrial space by tenants.
Many industrial buildings in Singapore, particularly those zoned “Business 1” (B1) which indicates light industrial use, it was quite likely that at least 30 per cent of tenants did not meet the “60-40” rule. This is because industrial rent is 30 per cent to 50 per cent cheaper than commercial space rentals.
Demand from traditional tenants of industrial buildings – genuine industrialists – may also have dropped due to the changing face of the manufacturing sector.
The growing number of firms using industrial space as offices has led to calls for a relook of the zoning requirements.
“With less of the traditional hard manufacturing taking place in Singapore, there is a need to re-examine land-use zonings, usage definitions, planning parameters, plot ratio norms and regulations in industrial buildings,” Colliers International said in a recent report.
The report called on the Government to “adopt a more flexible stance” in its definition of allowable use of B1 space, to take into account firms that support the manufacturing sector but are sandwiched in between the office and industrial use classifications.
Several other industrial tenants have recently been caught flouting the industrial usage rule.
Several units in these projects had been used for commercial uses such as offices, schools, restaurants and retail shops.
URA added that users of the units had been given a “reasonable but definitive timeframe to cease the unauthorised uses”.
“Apart from the more recent cases that are still under investigation or appeal, the rest of the unauthorised uses have since ceased,” she said. Users can be charged with failing to comply with the “60-40” rule, and may face a fine of up to $200,000 or up to 12 months’ jail, or both.
In our opinion, it’s unlikely that the government authority will change its stance on the 60-40 usage rule. Nevertheless, it may relax the rule on certain industries. The recent changes of industrial space usage was recently applied to religious activities whereby they are now allowed to operate from such industrial building.
For further information and consultation on the industrial building usage, please call us at 82001937.