CBRE Korea Reports 75% Growth in Busan's Grade A Logistics Market in 2024, Marking Largest Supply Ever

- The supply of Grade A logistics space in Busan is projected to reach 942,537 square meters in 2024, marking the highest level in history
- Newly supplied logistics facilities this year boast an average floor area of 96,882 square meters, driven primarily by large-scale logistics assets

December 11, 2024 (Seoul) – According to the latest report titled "Busan: The Logistics Hub of South Korea – Current Status and Outlook for the Grade A Logistics Center Market," released by CBRE Korea, the world's largest commercial real estate services company, the Grade A logistics market in Busan is set to achieve a record supply volume of 942,537 square meters in 2024.

This year, the market has experienced a remarkable 75% growth compared to the previous year, with a total of 678,175 square meters of new Grade A logistics centers supplied as of the third quarter. Additionally, an anticipated 264,361 square meters will be completed in the eastern and northern regions in the fourth quarter. Notably, the significant influx of large assets exceeding 99,173 square meters has played a crucial role in this growth, resulting in an average floor area of 96,882 square meters for logistics centers supplied this year—an impressive 62% increase compared to the average of 61,083 square meters from 2021 to 2023. By the third quarter of 2024, Busan's Grade A logistics centers total 26, encompassing a substantial 1,932,451 square meters.

Historically, Busan's logistics market has been characterized by a supply of small to medium-sized assets. However, since 2019, there has been a significant shift toward Grade A assets, leading to a surge in the availability of modern logistics facilities. As the Grade A logistics sector expands, the ownership landscape has evolved from assets intended for actual use to rental properties owned by operators, with rental assets now comprising approximately 78% of the market.

The growth trajectory of Busan's logistics market is underpinned by its status as the second-largest transshipment port globally and the seventh-largest container port, coupled with a robust manufacturing base and the expansion of key transportation networks and surrounding industrial complexes. Currently, 25 large industrial complexes have been developed in Busan and 64 in Gyeongnam to enhance synergies through manufacturing cluster formation, with around 61% of the forthcoming Grade A logistics supply expected to be developed within these complexes. Furthermore, the ongoing expansion of the Busan-Jinhae Free Economic Zone (BJFEZ), the development of the new Gadeokdo Airport, and advancements at Jinhae New Port are poised to further bolster the region's role as a logistics hub, promising sustained market growth.

In line with trends observed in the Seoul metropolitan area, leasing demand is predominantly driven by 3PL and e-commerce firms, which account for approximately 70% of the total leased area. Key 3PL providers, including CJ Logistics, Lotte Global Logistics, LX Pantos, and Dongwon LOEX, are propelling demand, while major e-commerce players such as Coupang and Kurly are investing in local hub expansions, supporting overall market demand.

Claire Choi, Senior Director, Head of Research at CBRE Korea, remarked, "Busan's commercial real estate market is emerging as the second-largest Grade A logistics market in South Korea. The increasing supply of Grade A logistics assets since 2019 enhances the investment appeal of the region, providing a viable alternative to the saturation observed in the metropolitan logistics investment market. While investment activity has been somewhat subdued, the market holds significant growth potential, and we anticipate a revitalization of Busan's logistics investment landscape in tandem with the recovery of the metropolitan area."