Among logistics centers in the greater Seoul area with a total floor area of 33,000 square meters or more, it turned out that half of the business sites received permits but were unable to break ground for a year. More than 50% of the unstarted business sites were concentrated in the southern metropolitan area, including Icheon, Anseong, and Yeoju.
According to the report "A new balance in the upcoming logistics market" released by commercial real estate firm CBRE on the 11th, as of the end of the first half of this year, among 24 submarkets in the greater Seoul logistics market, there were unstarted business sites of 33,000 square meters or more in a total of 15 submarkets, comprising 172 assets. The size of the unstarted business sites was about 12.21 million square meters, accounting for 54% of all 318 logistics centers.
By area, 111 unstarted business sites, or 57% of the total, were concentrated in the three submarkets of Icheon, Anseong, and Yeoju. In Incheon, compared with existing supply business sites, about 15% of sites had construction temporarily halted. In Gimpo, a key logistics submarket, there were no unstarted business sites. By contrast, in Anseong and Yeoju, roughly 100–150% of the existing supply was in an unstarted state.
Ownership of the 172 unstarted business sites falls largely into corporations, individuals, and the state, with the majority being corporate-owned assets. Corporate-owned business sites accounted for about 75% of the unstarted site count and about 82% by area.
Among corporate-owned business sites, most of the land was held by general corporations, with about 20% of the total by size owned by large companies such as Coupang, Lotte, KT, Daesang, and Hyundai.
Unstarted business sites owned by general corporations, which are expected to have the greatest impact on future supply, total 93. Their area is about 8.14 million square meters, making up 66% of the total floor area of unstarted assets. This is about 30% of the entire logistics market in the greater Seoul area with total floor area of 33,000 square meters or more. These business sites are mainly distributed in Yeoju, Yongin, Anseong, and Icheon.
The main factor cited for the contraction in logistics center supply in the greater Seoul area is rising construction costs due to the spread of COVID-19. In particular, for logistics center development, where construction costs take up a larger share than for offices, profitability worsened, becoming an obstacle to new development.
Tightened permitting regulations, high vacancy rates, and developer-led supply focused on cutting expense without forecasting tenant demand are also cited as factors hindering logistics center supply.
CBRE projected that, given market instability, rising construction costs, stricter permitting, and the slow recovery of investment sentiment, it will be difficult for unstarted business sites to proceed smoothly to supply.
On the other hand, demand for logistics space is expected to keep growing, led by e-commerce and third-party logistics (3PL) firms. Coupang and CJ Logistics hold a substantial portion of logistics centers in Gyeonggi and are leading the market, and with the growth of online transactions and the mobile shopping industry, Chinese e-commerce players are also moving to secure logistics infrastructure.
Choi Su-hye, executive director and head of research at CBRE Korea, said, "While new supply of logistics centers is likely to decrease sharply going forward, on the demand side, steady growth is expected," adding, "the greater Seoul logistics center market will move past a period of oversupply and enter a new phase where supply and demand are in balance."