Rapid Growth of Logistics Center Market Amid Same-Day Delivery Competition... Sale Price per 3.3㎡ Approaches Metropolitan Area Apartment Levels

Logistics Centers Trading at 11 Million KRW per 3.3㎡ Continue to Increase

Approximately 13,000 Logistics Centers Nationwide, 30% Concentrated in the Southeastern Region of Gyeonggi Province

[Asia Economy Reporter Kim Min-young] The logistics center market is rapidly growing due to the expansion of e-commerce amid the prolonged COVID-19 pandemic and the delivery speed competition among distribution companies. The sale price of logistics centers equipped with cold storage facilities in prime locations has risen by 40% compared to five years ago. The sale price per 3.3㎡ has reached a level comparable to apartment prices.

According to data secured through a nationwide survey by the commercial real estate total platform RSquare on the 16th, there are currently 11,069 logistics centers identified. Considering those under construction, the total is expected to reach 13,000.

The area with the highest concentration of logistics centers is Gyeonggi Province (around 5,300). Since half of South Korea’s population resides in the metropolitan area including Seoul, logistics demand is concentrated there. The core area among these is the southeastern region, where about 3,000 logistics centers are located. More than 20% of all logistics centers are in this southeastern region. It was found that cities such as Icheon, Gwangju, Yongin, Hwaseong, Anseong, and Pyeongtaek each host between 300 and 500 logistics centers.

Logistics centers considered ‘large’ by the industry, with a total floor area of 33,000㎡ (10,000 pyeong) or more, number 525 nationwide. Of these, 295 are in Gyeonggi Province and 47 in Incheon, with 342 in the metropolitan area accounting for 65% of the total. The company using logistics centers the most was Coupang, followed by major distribution and logistics companies such as CJ Logistics, Lotte, Shinsegae, and large 3PL (third-party logistics) providers.

With the increase in same-day delivery of fresh food, cold storage logistics centers located in key metropolitan areas have rental fees estimated at about 70,000 to 90,000 KRW per 3.3㎡ per month. For a logistics center with a total floor area of 33,000㎡, rental fees alone can reach several hundred million KRW per month, even considering the deposit. Older or less ideally located cold storage logistics centers have rental fees formed in the mid to high 50,000 to 60,000 KRW per 3.3㎡ range.

For ambient temperature logistics centers (typically on the first floor), rental fees range from 20,000 to 50,000 KRW per 3.3㎡. Prices rise sharply as proximity to Seoul increases. According to RSquare, the sale price of cold storage logistics centers in prime locations has risen about 40% compared to five years ago. Recently, a real estate asset management company purchased a logistics center in Yongin, Gyeonggi Province, at 11 million KRW per 3.3㎡, and a logistics center in Yangsan, Gyeongnam, was priced at 10 million KRW per 3.3㎡. This is similar to the average sale price of 10.63 million KRW per 3.3㎡ for apartments in Icheon, Gyeonggi Province.

Competition to secure logistics hubs is fierce even in Seoul, where land prices are high. The city center was previously considered unsuitable for logistics centers due to expensive land, complaints, and complex permits. However, companies prioritizing delivery time over logistics costs are aggressively securing ‘Micro Fulfillment Centers (MFC)’ in the city center. According to RSquare, there are about 300 urban logistics warehouses in Seoul.

RSquare stated, "Online luxury goods brokerage companies are expanding their logistics centers, and startups driving changes in lifestyle and consumption patterns are also riding this trend, impacting the logistics market,” and predicted, “The logistics center market size will continue to expand in the future."

This content was produced with the assistance of AI translation services.