Net absorption at lowest level since Q4 2019

• In Q1 2026, net absorption in the SCA Grade A market was approximately 33,652 pyeong. The South-east was the only submarket to post negative net absorption, while the Central, North, South, and West submarkets recorded positive net absorption.
• The South-east submarket recorded negative net absorption, with tenant departures at several centres. Conversely, the West submarket posted the highest net absorption, welcoming new tenants from the 3PL and wholesale & retail sectors.

Quarterly supply hits lowest level since Q4 2020

• In Q1 2026, only one new logistics centre was delivered to the SCA market. One Base Yangju, with a GFA of approximately 52,618 pyeong, was completed in the North submarket, adding to available leasable space.
• The overall vacancy rate in the SCA market remained stable at approximately 15.4%, similar to the previous quarter. The North recorded a significant increase due to new supply, while the Central, South, and West declined q-o-q. The South-east remained relatively flat.

Logistics market cap rate remains stable at 5.2%

• In Q1 2026, net effective rents in the SCA market reached about KRW 32,600 per pyeong, increasing 0.7% q-o-q and 3.2% y-o-y. All submarkets recorded rental growth during the quarter, with the North and West posting the highest rental increases.
• The logistics investment market recorded a transaction volume of KRW 747.2 billion in Q1 2026. The quarter’s most notable transaction was Arenas Yeongjong, which traded from IGIS Asset Management to Capstone Asset Management(NPS) for KRW 432 billion.

Outlook: Cap rate compression of 10bps forecast by year-end

• Grade A supply in 2026 is expected to decline further than previously anticipated to only about 55% of 2025 levels. As supply tightens, leasing activity is forecast to focus on existing centres, with vacancy rates expected to stabilise further.
• The investment market is forecast to remain highly polarised, with interest concentrated on core-type assets. Foreign investors are expected to dominate activity, although domestic institutional investor participation is forecast to increase gradually.