Icheon is experiencing a surge from 1,138k py (as of 4Q’22) to 1,581k py (as of 2Q'24), resulting in increased vacancies and decreased effective rents. Due to the lack of new development sites, the supply of distribution centers has expanded to outlying areas, especially near the National Highway 3 and Yeongdong Expressway, which have excellent transportation convenience.
1,162k py (About 70% of the existing supply) has been approved and is ready for development, but only about 9% has been started due to deteriorating business conditions, and the remaining projects are expected to be delayed or canceled. New supply is planned in the highly competitive West Icheon area, with some developments in the East and South Icheon areas with good transportation access.
3PL logistics companies occupy the largest area (about 58%), followed by e-commerce, fashion, and F&B. It is home to distribution logistics hubs such as CJ Logistics and Han Express, e-commerce fulfillment centers such as Coupang and Team Fresh, and fashion logistics centers such as F&F and FILA, and low-temperature logistics hubs for F&B companies such as food distribution logistics companies JETTE and Foodist.
While the logistics real estate market is oversupplied, areas with last-mile delivery are undersupplied with warehouses. Warehouses in high-demand, accessible Class S and Class A areas account for only 22% of the total supply of warehouses, leaving a shortage of logistics infrastructure in urban centers.
Many retail logistics companies are focusing on diversifying their delivery services, on-demand services including same-day, fast and holiday delivery. They are striving to have urban logistics bases that can reduce delivery costs through multi-trip shipping and provide fast delivery services.
Warehouse rents are increasingly differentiated to urban centers. Class C in the outskirts from 23k to 41k won/py, while Class S in the city range from 43k to 62k won/py. Due to the recent deterioration in business conditions, only 19% of new permits in the Seoul Metropolitan Area have started construction, but the 36% start rate for warehouse development in Class S and A areas, where rents have remained stable, is much higher than in Class B and C areas.
