Fewer new logistics parks due to export downturn, says Knight Frank Thailand

The new supply entering the market is expected to be slacking off. However, the occupancy rate tends to be stable as the net take-up increases at the same level as the new supply. 
The rental rate is forecast to remain constant due to the balance level of new supply and new demand, putting pressure on price competition and preventing a price rise. In addition, progress on infrastructure, including the Laem Chabang port expansion, and the road and rail network development, is still the key positive factor that drives private investment and logistics space demand.
Marcus Burtenshaw, executive director and head of Commercial Agency, Knight Frank Thailand, said: “Some warehousing locations are clearly faring better than others. New supply needs to be constrained in areas of falling occupancy. Despite this, the underlying fundamentals that originally established each of the major strategic distribution locations are the same. Demand for warehousing space continues to grow, as e-commerce begins to take an even bigger role in the retail landscape in Thailand.”
According to Knight Frank Thailand’s research, at the end of the first half of 2016, the total warehouse supply was at 3,732,147 square metres, representing an increase of 4.1 per cent from the end of the last period with 145,737sqm being added to the market. 
The latest peak in the addition of supply was still from 2014, which was when the country’s largest developer completed its three largest projects. Since then, the market saw relatively incremental increases in supply to cope with a slowing growth in demand. 
For the remainder of 2016 all the way to 2017, approximately 300,000sqm of warehouse supply is expected to enter the market. Up to 250,000sqm metres of this would be in Samut Prakan province as the location offers a healthy level of demand and high levels of occupancy.
The total occupied space for the period was at 2,909,594sqm, an 8.7 per cent increase from the previous period; this amounts to an occupancy rate of 78 per cent. Based on the occupancy trend, both supply and occupied space have been increasing at a similar rate, keeping the occupancy level relatively stable around 77.5-78.5 per cent. 
The Eastern seaboard saw the highest jump in occupancy whereas the greater Bangkok region (Suvarnabhumi-Bang Pakong) enjoyed the highest warehouse occupancy rate. Pathum Thani–Ayutthaya still witnessed a continued reduction in its occupancy rate since the 2011 floods, and the condition was further worsened by the addition of new supply. 
The warehouse rental rate remained relatively stagnant in Thailand. As of the first half of 2016, the average warehouse rental rate is at Bt156.9 per square metre per month. 
Bangkok as a province maintained its position as the most expensive area along with Pathum Thani, with the highest asking rent of Bt185 per square metre per month. In contrast, Khon Kaen had the lowest asking price of Bt110 per square month.
The current rental rate is at the maximum of Bt185 per square metre per month in Bangkok |and Pathum Thani, followed by |the maximum rent of Bt180 per |square metre per month in |Samut Prakan, Chon Buri and Chachoengsao. 
Generally, warehouses command variable rents, depending on building location, design, condition and age. The modern logistics parks usually provide docks, raised floors, a floor loading capacity of up to 3 tonnes per square metre, and ceiling height of 10 metres.