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SIOR Asia Pacific Region: Market Updates

Industrial Sector

In recent years the SIOR Asia Pacific (APAC) Region has gained momentum with a strong presence from 31 SIOR members representing nine countries circling the Pacific Rim. Three such members collected industrial market updates from Korea, Australia, and Hawaii to provide an industrial outlook of the APAC region.


South Korea is regularly ranked by Bloomberg as the most innovative country globally. Combine this with some of the world’s fastest broadband speeds and an internet penetration of 98%, and it is no surprise that e-commerce plays a massive role in people’s lives. The e-commerce sector grew at a CAGR of 23.3% over the last five years and has accelerated further since the pandemic.

The rapid growth of the e-commerce sector has driven a big uplift in demand for logistics and warehousing space and has put pressure on logistics companies to handle ever higher volumes of packages efficiently and quickly. Indeed, in Korea, which is famous for its “ppalli ppalli” or “fast-paced” culture, Koreans expect almost anything to be available for delivery nationwide within a few hours. Coupang, Korea’s answer to Amazon, offers “Rocket Delivery” by 6 a.m. for anything ordered by 11 p.m. the previous evening, or same-day if ordered before noon. This has fueled massive development in traditional logistics warehouses, cold-storage, and last-mile logistics, as well as the adoption of state-of-the-art technology and sophisticated software systems, data analytics, and automation to streamline operations.

In recent years, capital from across the globe has flowed into the industrial real estate sector with investors clamoring to get a piece of the action. The largest transaction of 2023 so far has been Brookfield’s acquisition of the Cheongna Logistics Center in Wonchang-dong, near Incheon, a 430,000 sq. m. distribution facility, with both dry and cold storage, spread over 10 stories for ₩659 billion KRW (approx. $515 million USD).

Despite the recent increase in construction costs as well as an increase in the cost of debt, which has slowed transaction volumes, e-commerce has revolutionized the logistics sector in South Korea, leading to increased efficiency, improved delivery options, and an enhanced customer experience, and we expect the sector to continue to grow from 2024. The industry has embraced technological advancements and made significant investments in logistics to adapt to the changing landscape of online retail, a trend that will continue for years to come.


Hawaii’s industrial market has entered into the tightest market in history. The vacancy rate declined to under 1% during the fourth-quarter of 2022 and remained below 1% through the second quarter of 2023. As we head into the post-pandemic era of industrial real estate, the theme for Hawaii is “Scarcity.” We have a lack of industrial-zoned, fee-simple land and a lack of inventory of available space for lease.

Leasable inventory is commanding base rents which have reached a new high of $18.24 per square foot per annum with annual escalations of 3%-3.5%. Due to the existing demand and stiff competition, Tenants are paying a premium for in-fill space and are forced to expedite their decision-making process to secure suitable space in efforts to satiate their requirements.

The sub-1% vacancy is creating a “bottom of the barrel” syndrome on the islands, where nearly all the available space for lease is functionally obsolete and remains vacant. In essence, this phenomenon has created a perception of an unprecedented 100% occupied market.

With the rise of e-commerce and distribution during the pandemic and post-pandemic, the scarcity of land can be credited to several land transactions by players in the e-commerce and distribution arena. Much of the initial large land plays started with the purchase of 14.55 acres of industrial-zoned land by Amazon in 2021, in Honolulu’s urban core for $200 per square foot. Costco followed suit with the purchase of 45 acres at Ho’opili Business Park in West Oahu in 2022 for $75 per square foot. Then again followed by a purchase of 45 acres of industrial-zoned land at Kapolei Harborside in West Oahu by Amazon in 2022 for $45 per square foot. Finally, Ferguson Enterprises completed a purchase of 29 acres of industrial-zoned land in Ewa Beach in Oahu in early 2023 for $49 per square foot.

The last of the remaining industrial land is located at Kapolei Harborside Industrial in West Oahu, owned and being developed by the James Campbell Company. They plan to build spec warehouses with the first 102,000 square feet being delivered in early 2024. Hopefully, Kapolei Harborside will provide some relief to the tight industrial market.


The industrial real estate market in Australia has witnessed remarkable demand in recent years, with limited stock nationally driving rampant and widespread growth in industrial rents, led by Sydney.

The demand for industrial properties, including warehouses, distribution centers, and logistics facilities, has surged due to the rising popularity of online shopping and the need for efficient supply chain networks. The rapid growth of e-commerce (averaging 20% per year between 2017-2022) has significantly impacted the industrial real estate market. As consumers increasingly rely on online shopping, retailers and logistics companies require larger, more technologically advanced facilities to meet the growing demand. Amazon has recently opened its first robotic fulfillment center outside Sydney to public tours, where interested onlookers can get a glimpse of the robotic drivers whizzing around a 200,000 square meter facility across four levels – a warehouse the size of 24 rugby pitches (or 37 football fields).

All of this has resulted in Australia having the world’s lowest industrial vacancy rate, with a national average vacancy rate of 0.6% as of the second half of 2022, with the latest figures in 2023 indicating that this has only dropped further. Sydney has the lowest rate of any city globally, with the latest estimates being vacancy at a paltry 0.2%. Macro factors such as construction and financing costs have dampened speculative developments, and investment activity has plunged 80% YoY as many vendors and purchasers are waiting for clarity on market conditions and outlook prior to acquiring or disposing assets.

The impact on rents has been significant to say the least, with nearly 40% YOY rent increases recorded in Sydney and Perth, 25% increases in Brisbane, and approx. 15% increases in Melbourne and Adelaide.

Regarding the outlook, some market spectators are hopeful that eventual material and labor cost easing will improve the Eastern Seaboard situation. Notwithstanding the record pipeline of supply of 2.5m sqm, less than half is expected to enter the market without a pre-commitment or an owner-occupier in place. However, there are some signs that there could be improvements on the horizon, with funding costs starting to stabilize (though many will be watching the RBA’s rate decision next week), which could mean some investors start to re-enter the market.

Tenants need to give themselves time in all markets to sufficiently examine market alternatives (if they exist), including new developments (which are leasing before PC in most instances). Failure to engage early will result in painful market reviews for many tenants, with no option but to accept, as there may be no suitable market alternatives that suit their timeline.




Media Contact
Alexis Fermanis SIOR Director of Communications