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Why Industrial Showroom Units are Rare These Days

Why Industrial Showroom Units are Rare These Days

Previously showrooms could be allowed in industrial developments under the previous set of Urban Redevelopment Authority (URA) guidelines. However, the guidelines have been revised to a new set. The circular by URA was published in November 2014.

What are Industrial Showroom Units

What exactly are showroom units within industrial developments? Industrial showroom units are units which are within an industrial building that are meant for the display of these two categories of products which are predominantly :

Products or goods that do not change hands and are not over the counter transactions

For instance, a furniture or car showroom where furniture or cars are displayed. Customers will place their orders but do not immediately receive their goods.

Products or goods that are delivered and installed not within the unit or on-site but are installed off-site at the customer’s location

Examples of such products would be floor tiles or home racking systems displayed at showrooms where the installation of products will only be done at the customer’s location after an order is made.

However, for incidental sale of smaller products or cash and carry may be considered but on condition that the primary activity of the showroom unit is for the display of the two categories of products as described above and not otherwise.

New Guidelines for Change of Use to Showroom

URA can now consider the use of industrial units as showroom units but it will be subject to the change of use application. For interested parties, the application for change of use can be submitted only when the industrial development has obtained its official Temporary Occupation Permit (TOP) and when the owner or potential tenant for the industrial space has been confirmed.

Application Process for Change of Use

The processing fee applicable is presently $535 (already inclusive of Goods and Services Tax) and usually takes around ten working days to process. Applications can currently be submitted online via LicenceOne website. URA will review the application and update the applicant on the outcome of the application. There is also a step-by-step guide to guide you through the online submission process. If you are renting a unit, you may also require a formal consent provided by the landlord.

Development Charge Applicable

If the change of use application is supported by the URA, the showroom will be approved on a Temporary Permission (TP) basis and development charge will be levied based on Commercial “A” rates. Development charge is a form of taxation that is levied when planning permission or change of use is approved in order to carry out projects that increase the land value. For change of use from general industrial to use as a showroom unit, it is a case of rezoning to a higher value use and therefore development charge is applicable.

For more information on the rates, you may refer to the development charge rates table for 2018. Do note that development charge rates are reviewed on a half yearly basis in March and September and may vary from time to time.

What to Look Out for if Your Are Sourcing for a Showroom Unit

There are still pre-approved showroom units available in the market where building developers have previously already applied for a permanent showroom status and have successfully obtained the necessary clearance to operate as showroom units.

However, not all ground floor units in industrial developments have the necessary approvals to operate as showrooms so do take note especially if you are looking to rent or purchase a showroom unit for your business to showcase your products.

The main reason why showroom units tend to command a premium in terms of rental rates is because these units are not too common in the market and also because the building developers have already been levied for the development charges which are applicable in order to upgrade the units to approved showroom units. These development charges levied can also be in quite substantial amounts and hence the rental rates are usually not as low as ordinary industrial units that are without showroom status. Units on the ground floor without showroom status are usually factory or warehouse units.

Source: URA