Kuala Lumpur industrial vacancy rate declines to 2.5% in Q2

The new completions in H1 were fully pre-leased.

Two warehouses were completed in Greater Kuala Lumpur’s prime logistics market in 1H22, namely Daikin Kota Elmina (32,300 sqm) and Benton Corporation Kapar Warehouse (40,392 sqm), adding an additional 72,700 sqm to the market. 

Upon completion, a JLL report said both warehouses were fully occupied by Daikin and Benton, respectively.

“Overall vacancy rate decreased to 2.5% (4Q21: 5.7%). This is attributed to expansion of operations by players in the 3PL and e-commerce sectors, such as N-Squared Ecommerce, a multinational e-commerce company based in Thailand, which took up space in LYL Puchong,” the report said.

Here’s more from JLL:

Warehouse demand continued to grow steadily as manufacturers expanded their storage space, in light of increasing production volumes driven by higher international demand. However, manufacturers remain cautious over forecasted production volumes as rising production costs and worsening supply constraints could negatively impact production outlook.

Warehouse demand from the manufacturing, third party logistics (3PL), FMCG, e-commerce and pharmaceutical subsectors has been continuously growing. The cold storage logistics and chemical storage subsectors have also recorded small movements.

Local and foreign investors remain attracted to logistics sector

International players, including 3PL, e-commerce and foreign investors, continue to expand into the Malaysian market. Several international and local 3PL and e-commerce players are actively looking to acquire more land to build warehouses or looking to purchase high-capacity prime warehouses, particularly in the Shah Alam and Bukit Raja districts.

Overall rents have increased slightly, mainly due to warehouses that enjoyed high occupancy rates continuing to raise rents. Another major reason for increasing rents may be due to increased operational expenditure induced by rising inflation, which the landlords have transferred to tenants by means of increasing rents.

Outlook: Sector resilience to drive local and foreign investments

Prime warehouse supply coming in will be demand-driven, with most incoming supply anticipated to be fully pre-leased or experience high take-up rates prior to completion. Demand for existing warehouses will remain high throughout 2H22 and 1H23, driven by the continuous expansion of e-commerce, 3PL and manufacturing companies.

More warehouse entries are anticipated to be announced in ensuing years as local and foreign investment interest continues to remain high, reflecting the resiliency of the warehouse sector.