Cambodia industrial market gains momentum, faces regional competition into 2026

Cambodia’s industrial property sector is moving from infancy toward scale, according to a market note released by CBRE Cambodia, as multinational buyers and contract manufacturers expand beyond China and seek lower cost production bases in Southeast Asia. The report highlights stronger absorption of warehousing and factory space in 2024 and the first half of 2025, and projects continued momentum into 2026, driven by garments, footwear, electronics assembly and agile logistics.

CBRE’s analysis shows a marked pick up in leasing activity across Phnom Penh and the coastal provinces where special economic zones are concentrated. The firm estimates the near term supply pipeline will bring several hundred thousand square meters of modern industrial floorspace online by the end of 2026, a step change from the small, piecemeal developments that characterized the sector five years ago. Vacancy for institutional grade stock has narrowed as existing projects take on larger occupiers, and headline rents have moved upward from historically low levels, improving investor yield expectations.

Despite the progress, Cambodia enters 2026 in a competitive regional environment. Vietnam continues to attract large scale electronics and textiles investment with deeper manufacturing ecosystems and greater inland logistics capacity. Thailand remains a hub for automotive and heavy industry, while Indonesia and the Philippines offer large domestic markets and expanding infrastructure budgets. These countries are pressing improvements to energy supply, ports and road links that directly address investors’ top supply chain concerns.

Structural constraints in Cambodia moderate the opportunity. Land for large contiguous industrial parks remains limited in proximity to Phnom Penh, which elevates logistics and last mile costs. Power reliability and grid capacity in certain provinces require upgrades to support high intensity manufacturing. Skills shortages in technical trades and middle management are another immediate bottleneck, raising the cost of upskilling for companies seeking more complex assembly work.

Policy choices will matter for whether Cambodia secures a lasting share of regional industrial relocation. CBRE’s assessment underscores the need for clearer zoning and land titling, predictable utility tariffs, streamlined customs for bonded warehouses, and targeted investment in vocational training. For the government, prioritizing concentrated industrial corridors with dedicated infrastructure could lower operating costs for tenants and make projects bankable for institutional developers.

Market participants are already adapting product types. Developers are layering logistics friendly features into speculative builds, offering flexible divisible units that accommodate small and medium sized exporters as well as larger original equipment manufacturers. Financial institutions are beginning to price facilities with longer maturities for high quality projects, reflecting an improving risk perception in certain subsectors.

The trade picture that underpins this demand is still unsettled. Ongoing US China trade tensions, reshoring incentives in advanced economies and regional trade agreements are all reshaping sourcing decisions. Cambodia’s immediate task is to convert investor interest into higher value, sustainable industrial jobs by addressing infrastructure, regulatory and workforce gaps. How successfully it does so will determine whether the country remains a niche beneficiary of supply chain shifts or graduates to a meaningful regional manufacturing hub by the end of 2026.