Asia’s industrial net absorption hits record highs in H1 2021

Net absorption reached 35.6 million sq ft, driven by expansions by 3PLs and e-commerce firms.

According to CBRE, growing e-commerce penetration and an occupier focus on resilience ensured the Asia Pacific logistics market enjoyed an upbeat H1 2021. The period saw robust expansion by 3PLs and e-commerce platforms, with net absorption for the period reaching 35.6 million sq. ft. in Asia, the highest first half figure on record.

Requirements for grocery and pharmaceutical related cold storage continue to grow, with the volume of such space leased in H1 2021 3x of that in H1 2019. Activity was led by grocery retailers backed by e-commerce platforms, traditional retailers expanding omni-channel grocery distribution, and specialist cold storage service providers.

Here’s more from CBRE:

Full-year Asia Pacific logistics supply will reach 167 million sq. ft. in 2021, 58% higher than the previous three-year average. While vacancy in major markets is expected to increase slightly in H2 2021 as supply peaks, occupancy in most markets is forecasted to remain high thanks to strong pre-leasing and enquiry levels. However, supply in Shenzhen will remain limited. 

Greater Seoul and Greater Tokyo will experience a supply peak from 2021 to 2023. However, supply pressure is limited as current vacancy stands below 3%. With the bulk of pipeline, these markets are expected to see more consolidations and relocations. In Guangzhou, Shanghai, and some Pacific markets, developers have expedited the completion of some projects in response to strong take-up.

Asia Pacific logistics rents performed well in the first six months of the year, with the aggregate hike of 1.6% y-t-d eclipsing CBRE’s original expectation. Half of the markets tracked by CBRE have seen growth outpace or close to previous full-year expectations, reflecting landlords’ stronger stance towards rental hikes amid the current upbeat leasing market. 

Weaker markets include Shanghai, Brisbane, North Vietnam and Greater Tokyo, where a large supply pipeline has prompted CBRE to lower its rental forecast. Landlords in these markets are likely to prioritise raising occupancy over rental gains. Elsewhere, rents in India are expected to remain stable amid improved availability in H2 2021.