Global property consultancy Knight Frank said it expects the Asia Pacific’s warehouse sector to remain stable for the rest of the year, with e-commerce continuing to be the main demand driver for new leases.

In a statement, it said based on its Asia-Pacific Warehouse Review for H1 2021 — which tracked prime warehouse rents across 17 key cities — there was a marginal change of -0.1% compared to the same period last year.

It noted that Melbourne and Brisbane experienced the largest quarterly decline in vacancy rates in a decade; while rents in Beijing recorded the sharpest increase in the region, rising 4.4% year-on-year as China’s economic rebound gathered pace.

Meanwhile, as prime warehouse rents in Singapore fell 3.9% year-on-year, Knight Frank said the outlook for rents is "likely to turn bullish," with an expected 3-5% upside for rents in the next 6-12 months.

"Despite operating under the shadow of the pandemic, warehouse markets across the region have remained largely stable, driven by sustained demand from the e-commerce sector," said Tim Armstrong, head of occupier services & commercial agency, Asia-Pacific at Knight Frank. "Recent events that have impacted commitments to customers have put the development of supply chain resilience into focus and major occupiers are responding by re-configuring their strategies by building out inventory buffers and expanding urban distribution nodes."

"This will have positive knock-on effects for demand to strengthen for logistics spaces. Developers in the region remain on the hunt for opportunities to capitalise on growth trends, indicating sustained confidence in the region’s warehouse markets," he added.

Christine Li, head of research, Asia-Pacific at Knight Frank, commented: "With demand for spaces expected to outstrip supply, the region’s warehouse markets have continued to report strong pre-leasing commitments and rapid take-up of spaces."

"Digital trends are becoming entrenched and competition in e-commerce retailing has and will continue to intensify. In many instances, expectations have shifted, and customers are now looking for instant gratification with on-demand fulfilment as a strategic necessity," Li added, noting that with little brand loyalty in the online world and snap buying decisions made, sales can be lost in a matter of seconds.

"Building that extensive and adequate supply network is key to preserving and gaining market share. For many players in the e-commerce sector, it is a question of now or never," she added.