Logistics Tenant Profile #15 – Goyang-Paju: Three Kingdoms Distribution Battle for Han River

Goyang-Paju has excellent access to the SMA, as well as large-scale residential areas (Ilsan New Town, Unjeong New Town, etc.) and convenient public transportation, making it easy to supply manpower. Due to these advantages, e-commerce companies are choosing it as a logistics hub, especially along the Seoul Munsan Expressway, which is easily accessible to Seoul. In addition, Paju is the representative publishing city where publishers and printing houses are concentrated, and many book logistics centers are located. Major players such as Kyobo Book Centre, Aladin, and Booxen are operating logistics bases.

123,000 PY of logistics center is scheduled to be supplied by 2024, but only about 13% has started due to the deterioration of the investment environment. The unstarted areas are expected to lead to delays in completion or cancellation of projects, so the supply is expected to decrease significantly compared to the plan.

E-commerce companies occupy the most space (about 48.0%), followed by publishing, manufacturing, fashion, and parcel services. Coupang’s delivery bases and BOLD9, Kyowon Start One’s fulfillment centers are located here. In addition, publishing logistics centers such as Kyobo Book Centre and Booxen are operating centered around the Paju Book City. Also, manufacturing logistics bases of Samsung Electronics and Hyundai Mobis are located.

With the rapid growth of the e-commerce industry, low-interest rate, and financial support measures, the new supply of logistics centers has exploded in the last two to three years. However, supply is expected to decline from 2024 onwards as rising interest rates and construction costs put pressure on new business development and is expected to pick up again after 2026. Meanwhile, the demand for e-commerce logistics is expected to continue to grow, reaching about 1 million PY in 2027.

The comparison of cumulative demand and cumulative supply of warehouses shows that there is a gradual oversupply starting in 2021, but the supply of warehouses will decrease to a peak in 2024, and the oversupply is expected to be eliminated by 2027 as the demand for e-commerce logistics gradually increases.

Cold storage centers increased its supply size by about 6.3 times from 110,000 PY in 2019 to 690,000 PY in 2023, as the early-morning delivery market grew with the launch of Kurly’s early-morning delivery service in 2015, along with expectations for the growth of the online food distribution market. However, contrary to expectations, online penetration of food and grocery has been slow to grow, resulting in stagnant demand for cold storage centers.

Due to the oversupply and demand stagnation, cold distribution centers are expected to resolve oversupply after 2030, and it is necessary to consider various countermeasures such as converting cold warehouses to temperature-controlled warehouses, converting to data centers, etc. for long-term vacancy resolution.