According to a recent report by CBRE Global Research & Consulting, the demand for logistics warehouse space in the Asia Pacific region will continue to grow. Against the backdrop of a clearer global economic recovery, the report identified three (3) key trends that are contributing to this strong demand:
1) Expansion of organized retail: The continued trend of developing well-organized shopping malls, as well as the increasing trend of urbanization and a growing middle class in emerging and less-developed markets, supports continued retailer expansion, including the build-out of store networks and the essential set-up of supply chains.
2) Growing online user bases: The operational success of online sales programs depends on pinpoint inventory management and rapid delivery, requiring well-stocked, strategically-located logistic facilities. While China and Japan, the largest markets by sales turnover, have seen a marked increase in modern logistics facilities, potential high-growth emerging markets such as India and Southeast Asia remain undersupplied.
3) Increased dependency on third-party logistics (3PL): With rising demand for organized retail and the growth of e-commerce, demand for qualified 3PL providers will rise. The need for delivery efficiency, inventory management, and freight-forwarding is driving the need for experienced logistics operators in the region, leading to increased outsourcing to logistics service providers.
Looking forward, CBRE expects rigid demand for space from 3PL companies in key trade hubs and gateway markets such as Singapore, Hong Kong, Shanghai, Sydney and Guangzhou, based on expectations of trade growth, industrial upgrading and ongoing corporate relocation. Aside from key trade hubs, the prominence of 3PL companies is a region-wide trend, not only related to export volumes but also to internal trade volumes fueled by growing consumer markets in the Asia Pacific region, as well as the ongoing fragmentation of manufacturing production across a wider geographic area.