The market benefits from built-to-suit deals and excess factory demand

• The market maintained a strong net absorption of 105,930 sqm in Q2 2024. The volume of net absorption added up to a total of 224,162 sqm during the first half of the year, which equates to 11.7% growth over the first half of 2023.
• Apart from significant demand for built-to-suit projects, the logistics market has also capitalised on the shortage of ready-built warehouses by converting industrial-zoned warehouses into light manufacturing facilities.

Abundant offerings sustain an occupier’s market

• Strong market expansion continued, with five completions recorded during the quarter, totalling 116,300 sqm. Four of the five projects were in Samut Prakan, accounting for 76,000 sqm.
• The vacancy rate compressed slightly to 11.1% despite a significant supply increase due to strong pre-leasing as well as a significant amount of new supply being built-to-suit.

Rents and market yields plateau

• Prime-grade warehouse rents remained stable q-o-q with increased competition from new and existing players. Newly completed facilities continued to command similar rents as older ones to remain competitive.
• Without any rent improvements during the quarter, the market yield held steady at 6.1% in Q2 2024.

Outlook: Eastern Economic Corridor to see a surge in supply for 2024

• Rapid supply expansion is set to persist, with an additional 229,300 sqm of new space scheduled for completion in H2 2024. However, we do not expect a significant change in the occupancy rate with robust demand.
• More activity will be observed in the Eastern Economic Corridor, as roughly 35% of the new supply in 2024 will be located in this submarket, in contrast to 2023, when Samut Prakan accounted for 85% of the new completions.