Thailand industrial vacancy rate to reach 8-10% in the medium term

This is as most of the upcoming new supply will be non-speculative.

A large volume of industrial supply has been announced to be completed in 2024. According to a JLL report, the entry of ESR will also add 600,000 sqm to the market during the next 3–5 years. 

However, the vacancy rate is expected to fluctuate only minimally, ranging between 8% and 10% in the medium term, as a large portion of the new supply will be non-speculative.

Here’s more from JLL:

Rent movement is expected to be minimal over the next couple of years as competition remains high and developers continue to expand their portfolios through the built-to-suit approach.

Domestic consumption continues to drive the logistics market

Net absorption of 91,500 sqm was recorded in 3Q23. Domestic consumption remained the key demand driver for logistics properties, with 3PLs and FMCG being the largest occupiers. Modern logistics facilities in the Samut Prakan area continued to be sought after as a result. 

Continued demand in the area was highlighted by the 30,000 sqm built-to-suit agreement between DSV Solutions and Alpha Industrial Solutions at Alpha Bang Na KM.19, currently under construction and set to be finished in 2Q24. Additional leasing activity was also observed in other submarkets.

New supply concentration in Eastern Vicinity

Frasers Property Logistics Centre Bangplee 7 and Bangkok Free Trade Zone 3 added a total of 91,800 sqm of warehouse space to the market in 3Q23. Both projects are located in the Eastern Vicinity (i.e., Samut Prakan province).

Frasers Property Logistics Centre Bangplee 7 (Phase 2) consists of two built-to-suit warehouses for Maersk with the aim of achieving a LEED Gold certificate. Phase 1 of the Bangkok Free Trade Zone 3 added 72,000 sqm to the market, the majority of which is a free-trade zone.

Warehouse rents show incremental growth

The rents in the Samut Prakan area saw a slight quarterly increase of 0.2%, reaching THB 162 per sqm, per month. This uptick can mainly be attributed to new warehouse developments situated in the Purple Zone, which caters to both industrial and logistics purposes.

A non-arm’s length transaction was recorded between Frasers Industrial Thailand REIT (FTREIT) and Frasers Property Industrial (Thailand) Company Limited. FTREIT acquired four warehouses in Si Racha and Phan Thong districts in Chonburi with a total GFA of 31,000 sqm and a total value of THB 736 million.

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