Sectoral demand remained resilient post-holiday

• Market activity rebounded following the Chinese New Year and Hari Raya period, with occupiers from E&E, medical, automotive and FMCG sectors actively seeking quality warehouse space.
• Leasing momentum was concentrated in Grade A facilities, with newly completed projects attracting the strongest interest as occupiers prioritised modern specifications and strategic locations.

New supply tests market absorption capacity

• Shah Alam International Logistics Hub completed in Q2 2026, delivering 2.8 million s.f. of Grade A warehouse space and lifting total stock to 39.58 million s.f., with 60–70% of the new supply remaining vacant as leasing negotiations progressed.
• Daiwa House Phase 3 reached 70% occupancy within three months of completion, demonstrating that well-located, modern facilities continued to attract strong tenant interest despite the broader vacancy uptick to 9.9%.

Rental growth persists but momentum is easing

• Gross rent stood at MYR 2.19 p.s.f. per month, with year-on-year growth of 0.6%, supported by premium pricing at newly completed projects and step-rent adjustments by REIT-owned properties on expiring leases.
• Older facilities responded by offering extended rent-free periods and additional services to retain tenants, reflecting a bifurcated market where asset quality increasingly determined rental outcomes.

Outlook: Automation and policy risk shape the forward pipeline

• IJM’s Storio Logistics at Elmina will feature ASRS technology with 100,000 pallet positions and AGVs, scheduled for year-end completion. This development reflects a broader pipeline shift toward high-specification, automated warehouse facilities.
• Government petrol subsidy reductions introduced uncertainty around future construction costs and development feasibility, warranting close monitoring as the market navigates an increasingly cost-sensitive development environment.