Kuala Lumpur prime logistics vacancy rises to 3.3% in H1 2024

Two new warehouses were completed during the same period.

In a report, JLL said two warehouses were completed in Kuala Lumpur H1 2024, E-Metro Logistics Park Metrohub 2 and Atrium Shah Alam 4, contributing 800,000 sq ft and 338,417 sq ft, respectively, of warehouse space to the market.

“Overall vacancy rate increased to 3.3% (H2 2023: 1.5%). This increase comes amidst slower growth in net absorption as occupiers take a cautious approach to expansion amidst increasing costs.”

Here’s more from JLL:

Warehouse demand saw a further slowdown in growth in H1 2024 as manufacturers maintained a cautious approach towards expanding storage space amidst increasing costs.

In H1 2024, warehouse demand continued to stem from the 3PL, pharma/medical devices, FMCG, automotive and cold-storage subsectors. The market also saw growing demand for ESG-compliant warehouses, as this remains a hot topic in corporate strategies.

Rents grow due to improving quality of stock

International players continued to expand into the Malaysian market amidst the ongoing trend of supply-chain diversification with the China Plus One strategy.

Overall rents grew by 1.7% in the quarter as the market saw some high-quality stock coming online, thus driving rents up slightly. 

Outlook: Logistics market to see AEI trend in the future

Asset enhancement initiatives (AEI) to upgrade warehouse facilities will remain a key trend as investors look to maintain asset performance amid increasing tenant requirements for certain technical specifications and ESG compliance.

Retail- and office-focused REITs are likely to continue looking to dispose of some of their commercial assets in favour of increased exposure to logistics and industrial assets, considering the sector’s resilience.

Note: Kuala Lumpur Industrial refers to the Greater Kuala Lumpur prime logistics market. Data is on a GFA basis.