Rapid industrial supply expansion to persist in Thailand

Nearly 230,000sqm of new stock will be completed by H2 2024.

According to a JLL report, rapid supply expansion is set to persist in the Greater Bangkok prime logistics market, with an additional 229,300 sqm of new space scheduled for completion in H2 2024. 

“However, we do not expect a significant change in the occupancy rate with robust demand,” the report said.

Here’s more from JLL:

More activity will be observed in the Eastern Economic Corridor, as roughly 35% of the new supply in 2024 will be located in this submarket, in contrast to 2023, when Samut Prakan accounted for 85% of the new completions.

The market benefits from built-to-suit deals and excess factory demand

The market maintained a strong net absorption of 105,930 sqm in Q2 2024. The volume of net absorption added up to a total of 224,162 sqm during the first half of the year, which equates to 11.7% growth over the first half of 2023.

Apart from significant demand for built-to-suit projects, the logistics market has also capitalised on the shortage of ready-built warehouses by converting industrial-zoned warehouses into light manufacturing facilities.

Abundant offerings sustain an occupier’s market

Strong market expansion continued, with five completions recorded during the quarter, totalling 116,300 sqm. Four of the five projects were in Samut Prakan, accounting for 76,000 sqm.

The vacancy rate compressed slightly to 11.1% despite a significant supply increase due to strong pre-leasing as well as a significant amount of new supply being built-to-suit.

Rents and market yields plateau

Prime-grade warehouse rents remained stable q-o-q with increased competition from new and existing players. Newly completed facilities continued to command similar rents as older ones to remain competitive.

Without any rent improvements during the quarter, the market yield held steady at 6.1% in Q2 2024.

Note: Thailand Industrial refers to the Greater Bangkok prime logistics market.