Hong Kong industrial rents forecast to fall by 5% this year

Rents declined by 9.1% in Q1.

Colliers reports that Hong Kong’s industrial market saw an increase in activity quarter-on-quarter, although leasing transactions remained largely driven by renewals as occupiers stayed cautious amid ongoing supply-side pressures.

Landlords continued to offer mild rental concessions to retain existing tenants, contributing to a 2.3% quarter-on-quarter decline in industrial rents and a 9.1% drop year-on-year.

Looking ahead, Colliers said escalating geopolitical tensions could pose downside risks to the recovery in trading momentum. The agency noted that a potential surge in oil prices may compress operating margins for third-party logistics providers and manufacturers, weighing on near-term profitability.

The consultancy forecasts industrial rents in Hong Kong will decline by around 5% by the end of 2026, with landlords expected to introduce additional leasing incentives to support occupancy levels, including air-conditioning installations and more flexible lease terms.

Despite near-term challenges, Colliers said structural demand drivers remain intact. The consultancy highlighted the Sandy Ridge data centre site award to a Chinese Mainland data centre operator, with estimated cumulative investment of HKD23.8 billion, as evidence of growing demand for technology and industrial space, particularly in the Northern Metropolis.