Logistics Center Supply Cliff: Why Industrial Real Estate Rents Are Rising

A supply cliff has hit the logistics center market. According to Savills Korea, metropolitan area logistics center transaction volume in Q3 2025 was KRW 3.1 trillion, a 42% increase from the previous year, while new supply plummeted 73% to 530,000㎡. CBRE also projects that new completion volume in the Seoul metropolitan area will decrease 70% from the previous year.

When supply decreases and demand maintains, rents rise. Logistics center vacancy rates are rapidly stabilizing below 10%. 3PL (third-party logistics) companies and e-commerce operators account for 77% of total demand, providing a solid structural demand base. CBRE analyzes that while logistics facilities built before 2000 show negative net absorption, new facilities since 2022 record over 200 million square feet of net absorption.

This trend affects Gyeongbuk industrial real estate in two ways. First, rising metropolitan logistics costs lead to revaluation of regional logistics hubs. Hyundai Mobis Yeongnam Logistics Center in Oedong, Gyeongju (81,000㎡) is a good example. Second, rents for facilities with logistics functions within industrial complexes rise.

Gyeongbuk's logistics infrastructure is surprisingly solid. CJ Logistics Pohang Logistics Center (located in Gangdong-myeon, Gyeongju), Oedong Logistics Center are in operation, with access to Ulsan Port (30 minutes) and Busan Port (1 hour). Being a transportation hub where Gyeongbu, Jungang, and Donghae expressways intersect is also a strength as a logistics location.

If considering logistics center investment, note two points. First, polarization between Grade A logistics centers and aging facilities is intensifying, so new investments must be built to latest specifications. Second, cold chain logistics (refrigerated/frozen logistics) is growing as a separate market, but Korea's cold chain infrastructure in the Asia-Pacific region is still insufficient.

Logistics center construction also requires permits. Registration for logistics warehouse business, building permits, and development activity permits are required, and traffic impact assessments are needed for large facilities. Since permits are simplified when building within industrial complexes, a strategy to secure logistics land in Gyeongbuk industrial complexes is effective.