1. Demand expected to normalise

    Logistics occupiers’ appetite for expansion will moderate further in 2024. To protect their bottom line against high accumulative rental growth and the softer economy, occupiers will give closer scrutiny to real estate plans and capital expenditure; a trend that will result in more lease renewals.

  2. Rents to come under pressure as vacancy rises

    Availability is projected to increase this year on the back of the ample development pipeline and growing volume of sublease space. Vacancy pressure will be unevenly distributed as new supply is often concentrated in submarkets located far from urban areas. Landlords will therefore have to offer more incentives to induce expansion, thus eroding rental growth on a net effective basis.


  1. More demand for flight-to-core and quality properties

    With more occupiers seeking prime core logistics space served by modern transport networks and compliant with logistics technology upgrades and/or sustainability requirements, more leasing activity in 2024 will be driven by upgrading demand.


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Leasing market forecasted to cool despite stronger demand from manufacturers

CBRE expects modest growth in logistics leasing activity in Asia Pacific in 2024 on the back of the more conservative business outlook among logistics occupiers. As they look to protect their bottom line against high accumulative rental growth and the slowing economy, occupiers will place real estate strategy and capital expenditure under closer scrutiny. 

Appetite for expansion will moderate this year. The bulk of such activity will be driven by upgrading to prime core logistics space served by modern transport networks and compliant with logistics tech upgrades and/or sustainability requirements.

3PLs will remain as the major demand driver. CBRE expects logistics outsourcing demand to grow further, driven by occupiers’ focus on cost-management and operational efficiency. 

Demand from e-commerce platforms will be bifurcated. Local consumption-driven e-commerce companies are reporting slower business growth, especially in mainland China, where there was a slowdown in new lease signings ahead of the year-end sales season along with some downsizing and re-negotiating of existing leases. Demand for speculative warehouses from domestic e-commerce powerhouses continues to be constrained by relocation to self-built warehouses. In contrast, mainland China-based cross border e-commerce firms remain in expansion mode in southern China, pushing down vacancy in Guangzhou from 21.9% to 2.5% in the space of only three quarters. 

This year will see growing demand for hi-tech manufacturers. Logistics space in Japan’s regional cities will be see more requirements from firms serving the semiconductor supply chain, while the expansion of electric vehicle and energy storage related occupiers will underpin new leases in mainland China. Southeast Asia and India will remain among the main beneficiaries of regional supply chain diversification, despite the likelihood of occupiers slowing decision making ahead of upcoming general elections.

Figure 14: Logistics leasing sentiment in Asia Pacific

Source: Asia Pacific Leasing Sentiment Index, CBRE Research, December 2023.

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Vacancy pressure to intensify as supply pipeline remains significant

Asia Pacific logistics supply peaked in 2023, with new stock reaching 200 million sq. ft.. While the regional development pipeline will decline this year, it will remain significant at around 185 million sq. ft.. Although the recent uptrend in vacancy is projected to continue on the back of moderating demand, vacancy pressure will be unevenly distributed as new supply is often concentrated in certain submarkets.

Greater Seoul will continue to experience significant oversupply pressure as logistics stock is projected to increase by 20% by year’s end. Vacancy will hit another record high, especially in the cold storage segment. The imbalance between supply and demand will nevertheless gradually ease as the boom in warehouse construction winds down. 

While upward pressure on vacancy in Greater Tokyo and mainland China will subside this year as the supply peak passes, the situation varies across individual submarkets. The flight-to-core mindset will deter occupiers in Japan from taking up space in more peripheral locations, where the bulk of the development pipeline is located. The supply situation diverges within the four tier I cities in mainland China. Northern and eastern China will remain under pressure amid the ample pipeline and prevailing high vacancy, while southern China will stay in favour of landlords. 

The outlook for vacancy in Vietnam diverges despite both Hanoi and Ho Chi Minh reporting record highs in 2023. The north can expect a mild decline this year as most of the pipeline is located near Hanoi, which is expected to attract stronger leasing demand. In contrast, vacancy in the  south will grow further ahead of the supply peak in 2025. CBRE therefore expects landlords to retain a flexible stance towards lease negotiations while also potentially delaying some projects.

Singapore and the Pacific will remain the most tightly-held markets in Asia Pacific. The former has seen strong pre-commitments to its 2024 prime logistics pipeline, which should keep vacancy below 3%. In the latter, availability is poised to rise on the back of growing sublease space and the supply peak, although vacancy is expected to stay below the historical average.

Figure 15: Logistics development pipeline and vacancy in major Asia Pacific markets

Remarks: Vietnam (Southern Region) includes Ho Chi Minh City, Binh Duong, Dong Nai and Long An while Northern region includes Hanoi, Bac Ninh, Hung Yen, Hai Duong and Hai Phong. No vacancy data for India is available.
Source: CBRE Research, January 2024.

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Face rents to stay unchanged but incentives to grow

With logistics occupiers adopting a more conservative attitude towards real estate planning and increasingly inclined to consolidate and renew leases, opportunities for rental growth will be limited. Landlords will have to offer more incentives to induce expansion and/or relocation activity. CBRE expects face rents to remain stagnant, with a rise in incentives triggering a decline on a net effective basis. 

Although rental growth in the Pacific and Singapore (prime) once again exceeded expectations in 2023, this year will see a loss of momentum. Given that rents have surged by 30% - 80% since the pandemic and a supply peak is on the horizon, landlords in the Pacific will be forced to adopt a softer stance to attract increasingly cautious occupiers. Singapore (prime) will continue to lead rental growth although momentum will slow ahead of the supply peak in 2025.

Rental growth in Vietnam has predominately been driven by higher asking rents in new supply. However, incentives have been on the rise since H2 2023, while older buildings have been cutting asking rents. With this trend set to continue, effective rents will decrease this year.  

Occupiers in Greater China will remain cost conscious amid the sluggish economic recovery, leading to a rise in cost-saving driven relocations in the north and east where availability is most plentiful. Rents in Beijing and Shanghai will thus remain under pressure. Guangzhou and Shenzhen will benefit from tight vacancy while Hong Kong SAR will see a mild correction in H1 2024 due to sluggish leasing demand and rising shadow space. 

Auckland and Greater Tokyo will record mild rental declines in 2024, mainly driven by new supply in decentralised areas. 

Despite slower regional rental growth in 2024, most occupiers will encounter substantial increases in rents upon renewal, when rents are marked to market. More occupiers will consider consolidating their footprint for cost management. Landlords are therefore advised to consider tenants’ needs by adopting terms such as rental scaling.

Figure 16: 2023E – 2024F Asia Pacific logistics rental forecast

Remarks: Vietnam (Southern Region) includes Ho Chi Minh City, Binh Duong, Dong Nai and Long An while Northern region includes Hanoi, Bac Ninh, Hung Yen, Hai Duong and Hai Phong. Rental growth for Singapore refers to prime logistics rents in the eastern and western areas only. Logistics rental growth for Asian markets refers to face rents while that for Pacific markets refers to effective rents.
Source: CBRE Research, January 2024.

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