After grappling with oversupply and sluggish leasing in recent years, the Greater Seoul logistics market is now showing clear signs of recovery.

With new supply sharply curtailed and demand stabilizing, nominal rents for prime-grade logistics centers have surpassed KRW 35,000 per 3.3㎡ — a new all-time high.

According to data from JLL, CBRE, and Cushman & Wakefield Korea, this turnaround is being driven by a rare combination of falling vacancies, limited new completions, and improving investor appetite.

In its Q1 2025 Korea Logistics Market Report, JLL projected that new logistics supply this year will amount to just 36 percent of 2024’s volume. Savills Korea similarly estimated that nationwide supply would hit 3.35 million square meters, with 2.45 million square meters concentrated in the Seoul Capital Area — about 55 to 60 percent of last year’s level.

Even these figures may prove optimistic. Cushman & Wakefield noted that only 1.25 million square meters are set for delivery in the first half of 2025, and warned that delays could push the year-end total even lower.

As new completions slow, vacancy rates are steadily declining. JLL reported that the Q1 2025 vacancy rate in the Seoul Metropolitan Area fell by 1.54 percentage points to 16.5 percent. Outside of submarkets like Yangju, Gapyeong, and Anseong — where five new centers were completed — vacancies fell across nearly all other areas.

Tightening supply is already putting upward pressure on rents. According to JLL, nominal rents for prime logistics centers larger than 10,000 pyeong (approximately 330,000 square feet) reached KRW 35,000 per 3.3㎡ (about USD 26), the highest level ever recorded.

This marks a 0.2 percent increase quarter-over-quarter and a 2.9 percent gain year-over-year. JLL added that while effective rents may still fluctuate depending on incentives, average rates are trending upward — especially on new lease signings and renewals.

At the same time, operating costs are rising. Management fees have increased from KRW 500 to KRW 1,000 per 3.3㎡, adding further financial pressure on tenants.

Investor sentiment is picking up as well. In CBRE’s 2025 Korea Investor Intentions Survey, 62 percent of respondents expressed interest in acquiring commercial real estate in Korea — up 19 percentage points from the previous year and the highest level since the survey began in 2020.

While offices remained the top asset class at 30 percent, interest in logistics held steady in the low 20 percent range, maintaining second place. Notably, preference for office assets dropped by more than 20 percentage points year-over-year — signaling a shift in capital priorities.

CBRE noted that foreign capital was particularly active in early 2025, and expects domestic institutional investors, including Korea Post, to return to the logistics market in the second half.

“Investor interest in logistics centers remains strong, particularly among overseas buyers,” CBRE stated. “With foreign capital already active, we expect renewed participation from local LPs to follow soon.”

This article was originally published by Corebeat on April 22, 2025.