Interest in the logistics sector has persisted over the past half-year, and both development and transaction activity have remained strong. That said, the market appears to be entering a period of transition, and there are some concerns that the previously tight balance between demand and supply has already started to loosen.<\/p>\n\n\n\n
Although vacancies in Greater Tokyo and Greater Osaka remain moderate overall, average rents experienced a contraction over the past half-year. Furthermore, some existing facilities are reportedly struggling with vacancies, and pre-leasing activity has been sluggish in several new developments.<\/p>\n\n\n\n
Indeed, a wave of new supply is forecast over the next few years in both submarkets, and competition for tenants will increase, which is likely to contribute to some upward vacancy movement and revisions in rents. Meanwhile, structural factors also look set to affect confidence in the logistics sector. The ongoing labour shortage continues to increase labour costs for logistics companies, while the increase in construction costs and interest rates are forcing some investors to reconsider acquiring land for development as well as logistics facilities for the meantime.<\/p>\n\n\n\n
Nonetheless, the fundamentals in the sector are still strong, and tenant demand will likely persist due to the strong growth potential of the e-commerce industry. Hence, the outlook should remain positive overall for the logistics market going forward.<\/p>\n\n\n\n