According to a new CBRE survey, logistics occupiers in Asia Pacific plan to expand their warehouse portfolio in the next three years, with a focus on high-quality facilities located in prime areas near customers and public transport.
The survey of 120 companies across Asia Pacific found that 68% plan to acquire and occupy more space over the next three years, down from 78% in 2021, as a pandemic-induced spike in demand for logistics has moderated. Occupiers are now focusing on enhancing operational efficiency, while maintaining a strong appetite for logistics space.
While most occupiers are concentrating on established and home markets, omnichannel retailers, manufacturers and third-party logistics service providers are the key drivers of demand for logistics space. High value-added industries are also expanding their logistics footprints in the region to diversify their supply chains.
More than half (56%) of respondents prefer logistics assets that are near customers and accessible to public transport. Occupiers are willing to pay more for better locations to mitigate the increase in transportation costs and potential disruption.
Warehouse automation is identified as the top measure to enhance supply chains, with new and functional logistics properties with higher ceilings, large numbers of loading bays, and reliable power supply being the most sought-after options.
"The growing use of warehouse automation across Asia Pacific is a clear indication that occupiers are striving to boost efficiency while addressing rising labor costs," said Ada Choi, Head of Occupier Research, Asia Pacific, for CBRE. "
In addition, occupiers are increasingly prioritizing future-proof facilities, such as green energy supply and electric vehicle charging stations, reflecting a broader commitment to sustainability." Short-term leases and/or flexibility for expansion is the most important element of future lease management for nearly half of respondents (49%), followed by early termination clause (44%) and renewal options (42%).
Occupiers are eager to assemble more agile real estate portfolios to meet short-term demand in view of prolonged macroeconomic uncertainty and ongoing supply chain complexity.
"While logistics continues to be the most preferred asset class among investors in Asia Pacific, interest is not as strong as three months ago," said Dr. Henry Chin, Global Head of Investor Thought Leadership & Head of Research, Asia Pacific for CBRE. "In light of the current slowing yield expansion, investors may consider monetizing earlier investments, particularly those with limited potential for asset enhancement, to realize profits and take advantage of current market conditions. To improve the quality of their portfolios, investors should focus on investing in future-proof assets located in prime areas that cater to the growing demand for high-quality logistics facilities."