2025 Asia Pacific Logistics Occupier Survey

Business confidence weakens amid heightened trade uncertainty

Optimism among Asia Pacific logistics occupiers declined in this year's survey, with 69% expecting business performance to improve in the next two years, down from 81% in 2023 (Figure 1).

More cautious sentiment is largely driven by mainland Chinese respondents, who are potentially adversely impacted by tougher U.S. trade policy. However, mainland China's Q1 2025 GDP growth of 5.4% and positive logistics net absorption during the same period indicate a certain level of market resilience. Optimistic markets are led by India on the back of the country's positive economic outlook.

While economic uncertainty and cost escalation remain the top two challenges, trade-related regulatory concerns surged compared to 2023, indicating occupiers have been significantly impacted by recent tariff-related volatility.

Mainland Chinese respondents are the most cautious, with close to 70% identifying trade uncertainty as their top challenge. Vietnam, Taiwan, Malaysia and Thailand are also susceptible to trade uncertainty due to their dependence on trade with the U.S., with exports to this market accounting for more than 10% of their respective GDPs in 2024.

Figure 1: Expectations for Business Performance in the Next Two Years

 

Figure 2: Expected Major Challenges in the Next Two Years

Occupiers struggle to adapt to fast-changing tariff policy

With tariff policy continuing to shift rapidly, most occupiers are finding it difficult to develop comprehensive and concrete plans. Some 41% of respondents indicated they are either only monitoring the situation or yet to reach any definitive conclusions.

This fluid and uncertain environment has prompted occupiers to become more risk-adverse, leading them to delay major investment decisions, including those related to real estate. The near-even split between occupiers planning to consolidate or downsize (34%), renegotiate leases (30%) or postpone expansion (30%) suggests that occupiers are actively considering a wide array of mitigation measures to address cost or demand associated real estate risks.

The fact that very few respondents are seeking to exit or relocate to alternative markets suggests a cautious and prudent approach is being favoured over the complete cessation of market operations. 

By business sector, Third Party Logistics (3PLs) platforms are more likely to consolidate and downsize, as they are especially sensitive to market volatility and tighter margins. Manufacturing-related occupiers are more habitual users of self-owned warehouses, making them less susceptible to real estate risks and more likely to postpone expansion plans.

Figure 3: Level of Preparedness for Potential Increases in Trade Tariffs

 

Figure 4: Real Estate Plans for Potential Increases in Trade Tariffs

 

Preference for increasing number of suppliers and outsourcing operations

Growing interest in emerging economies

More occupiers are looking for opportunities beyond established markets. India and Middle East recorded the strongest net expansion interest, followed by Southeast Asia. Logistics markets in these countries continue to witness strong growth, primarily driven by robust requirements from 3PLs and e-commerce platforms seeking to capture rising consumer demand.

Robust interest in these markets also indicates a shift toward supply chain diversification as more businesses look to reduce overreliance on a single market. Reflecting this trend, CBRE has observed a rise in demand from manufacturing-related occupiers in emerging southeast Asia and India.

Among developed economies, Korea is attracting the strongest interest among occupiers looking for expansion, predominately driven by relocation and upgrading moves. CBRE expects leasing momentum in this market to pick up from H2 2025 onwards as the negative impact from domestic political uncertainty and trade tension gradually dissipates.

Greater China is the least popular market for expansion. Economic growth in mainland China and Hong Kong SAR are expected to remain sluggish over the short-term due to the slow recovery in consumption demand.

Figure 7: Net Expansion Interest by Market in the Next Two Years

Indian occupiers display robust confidence

The survey revealed a stark contrast in sentiment between occupiers in India and China. Respondents in the former are more confident, with over 80% expecting business performance to improve in the next two years, compared to less than 40% of respondents in the latter. This divergence is also reflected in appetite for expansion.

Most Indian occupiers anticipate an increase in portfolio size, with 44% expecting their portfolio to grow significantly between 2027 and 2030. Occupiers in China have a more balanced outlook.

India's growing consumption market is encouraging 3PLs to enhance distribution networks to meet rising demand, and manufacturers to scale up factory and warehousing space. The country's logistics market remains in a growth phase, with its logistics space per capita and global logistics performance ranking at around half of China’s. 

The rising supply of modern logistics stock along with an infrastructure push from Indian government involving the construction of new transport nodes, highways and ports, have improved logistics efficiency across India. This is leading occupiers to explore locations outside the top eight cities, where costs are lower, but infrastructure is improving. 

Expansion momentum In India is led by domestic occupiers. While multinationals are keen to invest, a complex land acquisition process and regulatory requirements along with other geopolitical considerations may lead to delayed decision-making.
 

Figure 8: Expected Change in Portfolio - 2027 to 2030

Figure 9: Market Comparison Between China and India

Oversupply persists in mainland China despite stabilising demand

In contrast to India's buoyant outlook, mainland China's logistics market continues to face headwinds from the sluggish economy and ongoing destocking pressure. With the current supply peak set to last for some time, logistics rents will remain under pressure in the short-term. Apart from offering more incentives, landlords are advised to structure leases to align with occupiers’ business needs. 

Despite the prevailing mood of conservatism among occupiers, leasing demand is showing improvement. Net absorption in 2023–2024 exceeded 70 million sq. ft. per annum and rose to a record quarterly high in Q1 2025. CBRE expects leasing momentum to improve on the back of the central government’s efforts to boost retail consumption as well as the rapid development of the hi-tech and advanced manufacturing sectors.  

Figure 10: Logistics Rental Outlook 2025 to 2027

Figure 11: Logistics Net Absorption of Mainland China

Greater cost sensitivity amid economic uncertainty

Rather than focusing solely on rents, CBRE advises occupiers to review their total logistics operational expenditure when planning their real estate strategy. 

CBRE Supply Chain Advisory's analysis reveals real estate accounted for just 3-6% of entire logistics cost structure, with transportation comprising the majority (45 – 70%, followed by variable facility costs such as labour (15 – 25%). Establishing a logistics footprint in strategic locations can improve delivery efficiency, which translates into higher customer satisfaction and profitability. 

Transportation ranked as the most pressing cost-related concern. While the sea freight rate is only half of that in 2024, it has doubled recently due to the ever-changing tariff situation. Concerns regarding labour and real estate costs also edged up, driven by respondents in Japan.

Concern towards real estate costs is most prominent in mainland China, where around 75% of occupiers identified it as their main worry. Latest data by China’s State Post Bureau revealed that profit margins in the logistics industry have compressed for two consecutive years¹. Coupled with a leasing market that continues to favour tenants, many Chinese logistics occupiers are looking for cost-saving opportunities in their real estate portfolios.

Moderating concern towards CapEx is mainly driven by Indian occupiers. With the rapid growth of manufacturing and logistics demand and the limited supply of modern logistics facilities, occupiers are looking to invest in new facilities and facility upgrading. 

Figure 12: Level of Concern Regarding Cost-Related Items

More occupiers opt for asset light strategy

While logistics occupiers retain a solid interest in leasing existing assets, they are less interested in building their own facilities or entering build-to-suit arrangements compared to 2023. This shift to an asset-light strategy is the result of rising availability; elevated construction costs; and tighter project financing. 

Most markets have experienced, or are currently undergoing, a supply peak. Asia Pacific logistics supply in expected to increase from less than 2.5 billion sq. ft. in 2022 to just over 3.0 billion sq. ft. by end of this year, a rise of 22%. 

The vast number of new logistics facilities has pushed up vacancy across the region. Vacancy in most North Asian markets reached decade-highs last year and is projected to surge in Southern China over the next 18 months as record-high new stock comes on stream.

Apart from speculative-builds, mainland China is witnessing an influx of logistics stock constructed by major e-commerce companies, many of whom have made unwanted or excess space available for lease. Vacancy in the Pacific remains relatively low although upward pressure continues to build. 

While occupier choice is widening, interest in constructing new assets is retreating amid a rise in development costs. Turner & Townsend data suggest average development costs in Asia Pacific have increased by more than 10% since 2022. Although the rate of growth is now stabilising, elevated material costs and land prices, coupled with an ongoing skilled labour shortage, will ensure construction costs remain high across the region. 

Figure 13: Preference for Space Acquisition in the Next 24 Months

Cost is main factor influencing leasing decisions

This year's survey revealed a shift towards more cost-driven real estate strategies, with respondents identifying lower rents and better lease terms as the two most influential factors in both relocation and renewal decisions. Occupiers are expected to retain more negotiation leverage in the near term as space availability continues to increase. Landlords are advised to prioritise improving occupancy and adopt a more proactive approach towards offering incentives and structuring lease terms. 

Despite the stronger emphasis on cost, occupiers’ requirements for asset location and connectivity remain unchanged. This is because establishing logistics operations in strategic locations facilitates faster speed to market and lower transportation costs, which results in higher supply chain resilience and greater customer satisfaction. 

Figure 14: Top Three Factors Influencing Relocations

 

Figure 15: Top Three Factors Influencing Renewals

 

Asset connectivity remains a crucial consideration

Occupiers’ interest in logistics facilities close to transportation infrastructure, customers and the supply chain strengthened further in this year's survey. While demand for modern and institutional grade logistics facilities in urban areas also picked up, occupiers’ interest in such properties in decentralised locations or other satellite cities moderated. 

More intensive flight to core-and-quality demand has led to the more resilient leasing performance of logistics assets in urban areas. Examples include Greater Tokyo, where vacancy in the Tokyo Bay Area fell to just 7.3% in Q1 2025, compared to 16.8% in the Ken-o-do area. Coupled with the tight supply outlook in urban areas, this divergent performance is expected to continue in the medium-term. 

CBRE expects logistics occupiers' ongoing struggle to balance cost control with investment in strategic locations to result in a more selective approach towards real estate planning. Occupiers will consolidate more resources to establish bigger and more efficient logistics hubs in urban areas of major markets, while right-sizing their real estate footprint in less strategic locations. 

Investors are recommended to follow suit and focus on acquiring assets in infill areas. They may also explore development opportunities adjacent to new infrastructure such as expressways and airports, especially in emerging markets such as India and Southeast Asia. 

Figure 16: Top Three Locational Factors Influencing Asset Selection

 

Figure 17: Logistics Facility Type Occupiers Expect to Use More of in the Next Two Years

 

Demand for higher-spec facilities continues to increase 

The rapid adoption of new logistics technologies is supporting occupier demand for highly-functional logistics space. Compared to conventional warehouses, modern logistics facilities come equipped with larger floor area; more loading/unloading bays; and stronger power supply etc. to enhance operational efficiency facilitate compatibility with new technologies. 

While this year's survey showed that most logistics occupiers have higher expectations for their future real estate, priorities vary across individual industries. Increase in loading bays and/or use of cross docking facilities is the top priority for 3PLs and retail occupiers due to the increasing complexity of supply chain operations. E-commerce companies are the most demanding, particularly for floor loading. Although most manufacturing-related occupiers expect their real estate requirements to remain the same, their most wanted feature is stronger power supply.

Landlords and investors are advised to design and build new facilities that cater to the operational and spatial needs of target industries. More industry-driven building specifications will enhance asset competitiveness as well as long-term occupancy, especially in markets that favour tenants.

Apart from asset enhancement initiatives to retrofit or redevelop conventional buildings, landlords should leverage technology to improve the tenant experience. For example, waiting times at a distribution centre in Shanghai were cut by 90% following the owners' implementation of a cloud-based digital dock appointment system in 2020².

Figure 18: Occupiers’ Expectations for Building Specifications
(percentage of respondents that selected an increase)

Owners should prioritise initiatives that have immediate financial impact

Strategies for Occupiers and Investors

Economic headwinds and shifting trade dynamics will continue to cloud the near-term outlook of the Asia Pacific logistics market. Occupiers are reassessing their business goals, with balancing cost, efficiency and future growth a key priority. At the same time, landlords and investors face pressure from weakening fundamentals. 

CBRE recommends occupiers, landlords and investors recalibrate their real estate strategies by adopting a renewed focus on resilience and performance to navigate these cyclical challenges and provide a strong foundation for long-term growth.

 

Respondent Profile

• CBRE’s 2025 Asia Pacific Logistics Occupier Survey was conducted from March to April 2025
• More than 380 responses were received across Asia Pacific

Figure 20: By Market Overseen (multiple selection allowed)

 

Figure 21: By Sector

 

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