Demand for warehousing to stay healthy
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Warehousing demand is expected to remain healthy until more than 500,000 square metres of new supply enters the market in the coming year, according to Knight Frank (Thailand) Co.
“We believe warehouse rents will experience only slight growth as competition intensifies, especially in the strategic distribution locations between Laem Chabang Port and the main manufacturing clusters,” said Marcus Burtenshaw, executive director for commercial agency.
According to Knight Frank Thailand Research, 284,757sqm of warehouse space was completed in the first half of this year. Total supply of rental warehouses increased 19.5 per cent from last year to 3,135,174sqm. In other words, 511,568sqm of new supply entered the market since the middle of last year, mainly in Samut Prakan and the Eastern Seaboard. Most warehousing space is in Samut Prakan, which encompasses 1,158,287sqm, or 37 per cent of total space. This province has the key benefits of proximity to Suvarnabhumi Airport, Bangkok and major industrial estates.
Chon Buri is also a popular location for manufacturers and third-party logistics providers. The supply there is equivalent to 817.494sqm, or 26 per cent of total space.
Total occupied space expanded 11.4 per cent to 2,525,478sqm, while the occupancy rate dropped to 80.6 per cent because of new developments, primarily in Samut Prakan, Bang Pakong (Chachoengsao) and Chon Buri.
In first half of this year, net absorption was 212,396sqm and it remained consistently positive for three years, representing the healthy and growing demand for logistics property.
The warehouse occupancy rate as of the middle of this year was 80.6 per cent, dropping from last year by 0.6 percentage point.
Bangkok’s warehouse rental market gained the highest occupancy rate of 98.6 per cent, followed by Pathum Thani-Ayutthaya at 92.7 per cent and Suvarnabhumi-Bang Pakong at 86.1 per cent.
“Perhaps the most encouraging statistic that we can share in this report is that despite the volume of new supply that came on stream we actually saw an improvement in occupancy rates by 1.4 percentage point to 59.2 per cent on the Eastern Seaboard, signifying strong demand,” Burtenshaw said.
