Supply pipeline weighs on APAC logistics sentiment

This is despite resilient demand from various regions.

Leasing sentiment in the Asia Pacific logistics and industrial sector cooled in the fourth quarter of 2025, as sustained new supply continued to weigh on market conditions despite pockets of resilient demand, according to CBRE’s latest Asia Pacific Leasing Market Sentiment Index.

CBRE said sentiment softened after improving in the previous quarter, with tenant enquiries and site inspections holding broadly stable across the region. India reported the strongest expansionary demand, while leasing activity in South Korea gained momentum, supported by continued growth in third-party logistics (3PL) and logistics-driven occupiers.

By contrast, occupier sentiment remained weakest in Greater China, where economic uncertainty continued to dampen demand, particularly in mainland China.

Tenant-favourable conditions persist

The APAC logistics market remains firmly tilted in favour of tenants, driven by an elevated development pipeline across most major markets. CBRE said this supply pressure continues to place downward pressure on rents, although demand is expected to hold firm into 2026 in markets such as Japan and Australia, where rental declines are being constrained by limited available stock.

Survey results showed rental conditions softened toward the end of the year. In December, 28% of respondents reported rental declines, up from 18% in September, while only 12% saw rental growth, down from 23%. The majority of respondents said rents were unchanged, reflecting a more cautious leasing environment.

Incentives, meanwhile, edged higher as landlords competed for tenants. In December, 25% of respondents reported increasing incentives, up from 23% three months earlier, while incentives declined in just 12% of markets.

Leasing activity mixed

Tenant enquiries moderated during the quarter. The share of respondents reporting frequent enquiries fell to 35% in December from 47% in September, while infrequent enquiries edged slightly lower. Site inspections also declined, with frequent inspections easing to 32% from 42%, indicating a more selective approach by occupiers amid greater choice.

CBRE noted a clear divergence in leasing strategies across markets. Flight-to-quality relocations are supporting take-up in new, high-specification facilities in markets with higher availability, while cost-driven consolidation is dominating leasing decisions in mainland China and Hong Kong SAR.

Negotiating power remains with tenants

Lease negotiations continued to strongly favour tenants across the region. In December, 62% of respondents said negotiations were tenant-favoured, up from 60% in September, while landlord-favoured conditions remained unchanged at 17%. Neutral conditions edged down slightly to 21%.

CBRE said the persistence of tenant-friendly conditions reflects the scale of new supply coming online, even as long-term structural demand from logistics, e-commerce and supply chain reconfiguration remains intact.

Looking ahead, CBRE expects the balance of power to remain with occupiers in the near term, with market performance increasingly shaped by the pace of supply absorption and the ability of landlords to differentiate assets through location, specification and flexibility.