JLL: Industrial property market growth moderates in 2023

• In the "2023 Market Outlook & Sectorial Market Overview" media briefing held by JLL on Wednesday (Feb 15), its senior analyst Henry Hong shared that there will be 5.4 million sq ft incoming industrial property supply in 2023.
• "We foresee [industrial property] market growth to be at a more moderate pace while keeping its resilience as an asset class. With more professionally built assets added to the industrial stock, this can potentially boost premium rental rates for newer, high-spec storage spaces and facilities."

KUALA LUMPUR (Feb 15): Given the influx of new industrial property supply in the pipeline, JLL Property Services (Malaysia) Sdn Bhd foresees moderate market growth in 2023 while keeping its resilience as an asset class.

In the "2023 Market Outlook & Sectorial Market Overview" media briefing held by JLL on Wednesday (Feb 15), its senior analyst Henry Hong shared that there will be 5.4 million sq ft incoming industrial property supply in 2023.

"We foresee [industrial property] market growth to be at a more moderate pace while keeping its resilience as an asset class. With more professionally built assets added to the industrial stock, this can potentially boost premium rental rates for newer, high-spec storage spaces and facilities," he said.

Going into the first half of 2023, five new warehouses are expected to be completed, which are E-Metro Logistic Park Metrohub 1, Bukit Raja Industrial Gateway Plot 1 & 2, Mapletree Jubli Seksyen 22, YTL Bukit Raja Warehouses, and Bukit Raja Distribution Centre 2.

"As the demand from tenants for storage space becomes more high-tech and sophisticated, new warehouses in the pipeline are being designed to meet the current and future preferences and needs of potential logistic tenants.

"Adding on to the rising trend of the built-to-suit concept seen for the newer industrial developments and well facilitated industrial parks with an integrated logistics hub and inland port included, the demand for warehouses that are ESG-compliant and certified green has also gained traction, especially among the [multinational] companies," Hong noted.

Meanwhile, he expects office vacancy rates will increase following the completion of new office buildings, especially in the Kuala Lumpur city area. Rental rates, on the other hand, are expected to remain stable as the heavily discounted rental rates of older buildings offset the higher-than-average rental rates of new buildings entering the market.

"Market activity is anticipated to be led by office space consolidations and expansions arising from M&A (mergers and acquisitions) transactions completed in the past two years. As companies re-strategise and recalibrate their business plans and needs, opportunities are plentiful in the current market dynamic to relocate and commit to more favourable long-term leasing packages," Hong noted.

He added that the evolving workplace strategies will also continue to influence the current spatial need and preference of corporate tenants, which puts new and refurbished buildings at an advantage.

Commenting on the high-end, high-rise residential market, Hong observed that there is more incoming supply from the Damansara Heights area while Mont’Kiara, KLCC and Bukit Bintang CBD remain the hotspots for the property segment.

"We foresee the [high-end, high-rise residential] demand remaining muted this year due to the rising inflation and OPR (overnight policy rate), which dampen market sentiment. We also anticipate [fewer] launches of products in this segment this year, which will help clear the existing stock.

"We believe the unsold property absorption rate will go up and the unsold property number will go down. The overall residential market will stabilise only in 2024," he concluded.