E-Commerce continues to be an important demand driver

• Net absorption in 4Q22 totalled about 58,200 sqm, an improvement from a negative absorption of about -11,800 sqm in 2Q22. E-Commerce and its related businesses continue to be the key demand driver. 3PL services was recorded to hold the largest share of warehouse-leased space in 4Q22.
• Prime grade warehouse rent increased in 4Q22 by 5.03% from 2Q22 and 5.58% y-o-y to THB 160.5 per sqm per month, as there was minimal new supply added to the market.

Vacancy improves as current stock fills up

• The vacancy rate improved slightly from 8.3% in 2Q22 to 7.7% in 4Q22, as each development continued to fill up existing space with minimal new completions within 2H22.
• With a matured market, a shift in strategy by key developers was observed, shifting from ready-built warehouses to built-to-suit warehouses to minimise risk.

Market yield stabilises in a matured market

• Capital value improved by 10.7% y-o-y to THB 30,073 per sqm, due to higher construction costs and land prices. However, with rent increases, market yield has improved slightly by 0.3% y-o-y and is expected to slowly compress in the near term.
• As urbanisation and less availability of purple-zoned land drove land costs up in the Samut Prakan area, new supply has been observed to move to the Wangnoi area due to more attractive land prices.

Outlook: Built-to-suit approach continues to be the trend

• With four new projects scheduled to open in 2023, the vacancy rate is expected to increase slightly in the near-term future with additional new supply. However, with the majority of the supply pipeline being built-to-suit, the change will likely be minimal and eventually stabilise.
• Average rent is expected to drop to THB 157 per sqm per month in 2023 due to the additional prime grade supply. However, rental rates in logistics hot spots should remain as a result of strong demand.