Prime warehouses outperform as APAC logistics vacancy becomes increasingly polarised

Legacy assets and warehouses in outer locations are facing greater vacancy pressure.

New logistics supply is expected to remain elevated in selected mature Asia Pacific markets in 2026, but development activity is set to moderate from 2027 as developers scale back projects amid softer market conditions, according to CBRE's mid-year review.

The property consultancy said new stock in mainland China, Japan and Australia is expected to decline from 2027, with developers cutting projects more aggressively than previously anticipated. In India's prime locations, meanwhile, high land costs in key cities such as Mumbai and Delhi are expected to constrain new development.

CBRE highlighted an increasingly bifurcated vacancy picture across logistics markets. Prime warehouses in inner-city locations continue to attract demand and outperform the broader market, particularly in mainland China, Korea and selected Australian cities. Legacy assets and warehouses in outer locations are facing greater vacancy pressure.

Occupiers are also becoming more cautious on capital spending. CBRE said third-party logistics providers (3PLs) and e-commerce operators have become increasingly cost-sensitive amid an uncertain macroeconomic environment, leading some to put automation and smart-system investments on hold.

Demand for large-floorplate warehouses has nevertheless remained resilient, as occupiers seek facilities that can accommodate future upgrades without requiring immediate capital expenditure. CBRE expects this preference to become more widespread in the medium term as cost pressures ease.

The consultancy cautioned that thinning operating margins among 3PL and e-commerce operators warrant close monitoring, as prolonged cost pressures could further delay the sector's automation upgrade cycle.

At the same time, supply chain diversification remains a structural trend across the region. Southeast Asian markets have shown resilience, supported by an electronics upcycle and front-loading activity in a relatively stable tariff environment.

Robust manufacturing demand has encouraged occupier expansion across Southeast Asia, tightening the availability of factory land and ready-built space, CBRE said.

However, the consultancy noted that several markets have yet to finalise bilateral trade agreements with the US. This leaves occupiers exposed to further trade uncertainty and is reinforcing the need for companies to diversify their supply chains.