New demand remains subdued as businesses exercise caution

• Lingering macroeconomic uncertainties, elevated business costs and the contraction in manufacturing output in Q1 2024 weighed on demand for logistics/warehouse space in Q2 as occupiers remained cautious.
• In Q2 2024, new/expansion enquiries for general storage space remained soft. However, there have been some new and expansion enquires for cold-room premises, especially from food-related businesses.

No new completions for let in Q2 2024

• No new multi-tenanted warehouse completions occurred in Q2 2024, keeping the vacancy rate for quality logistics/warehouse space tight over the quarter.
• Japanese shipping giant Mitsui OSK Lines acquired half of Kajima’s 49% stake in a cold storage project on Jalan Besut. Commonwealth Capital retains its 51% share. This new development is scheduled for completion in 2025.

Slowest quarterly rent and capital value growth in 13 quarters

• Tight vacancy extends the continual rent growth, albeit at the slowest pace since Q2 2021.
• On the capital market front, investors and occupiers are still exploring investable assets, supporting a mild upward trend in capital values while keeping yields stable in Q2 2024.

Outlook: Limited rent growth potential

• Rents should hold relatively steady in H2 2024 due to less sanguine demand prospects, occupier cost sensitivity and near-term supply pressure. Three new multi-tenanted logistics/warehouse facilities are expected to be completed in 2025.
• Sustained investor interest in logistics/warehouse assets and the impending US Fed interest rate cuts should keep yields stable. Capital values should keep pace with rents over H2 2024.