Demand growth in the EEC continues with persisting tailwinds from the China+1 policy

• In Q1, Thailand’s logistics market saw sustained healthy demand, with net absorption reaching 115,000 sqm. This was largely due to strong demand for ready-built projects fueled by third-party logistics service providers and the expansion of the manufacturing sector.
• The Eastern Economic Corridor (EEC) submarket benefitted from its location near manufacturing hubs, resulting in strong take-up and pre-leasing activity for recently completed, ready-built projects.

Market sees vacancy rate drops despite notable supply expansion

• Four project completions were recorded in Q1 2025 with a combined leasable area of 93,000 sqm, all located within the EEC submarket. These included projects from Frasers Property, Prospect Development, Alpha Industrial Solutions and SC Expedition.
• Strong demand for new ready-built projects outpaced new supply, leading to a slight decrease in the market-wide vacancy rate, which dropped by 0.6% q-o-q to 10.6%.

Strong competition keeps rents stagnant as new projects offer competitive rates

• The average market rent saw a slight increase to THB 159.1 per sqm, per month. New projects showed minimal to no rent premium compared to older properties in the same area, resulting in stagnant rent growth.
• Capital value saw a q-o-q growth of 0.7% and was recorded at THB 31,564 per sqm, due to a slight improvement in rents. Meanwhile, the market yield remained stable at 6.05%.

Outlook: New tariffs may hinder logistics demand for Thailand

• At least 13 projects, totaling 427,000 sqm of leasable space, are expected to be completed by end-2025. Approximately 114,000 sqm of this will be built-to-suit properties.
• The tariffs imposed by US President Donald Trump have created uncertainty regarding the benefit of the China+1 policy for Thailand. This will likely cause investors to adopt a wait-and-see approach, negatively impacting overall demand in Thailand’s logistics market.