Hong Kong warehouse rents drop for the first time since Q4 2020

Rents declined by 1.1% in Q1 2024.

Aggregate trade in January and February rose 12.9% year-on-year. CBRE says should this trend continue into March, it would mark a second consecutive quarter of year-on-year growth. Container throughput increased by 3% year-on-year, the first growth since Q2 2022, while airfreight increased by 21% year-on-year.

Here’s more from CBRE:

Leasing momentum remained weak in Q1 2024. The biggest deal involved Rhenus Logistics leasing 178,400 sq. ft. in Goodman Westlink. Other highlights included aviation supply company Silk Full Management leasing a total of 170,000 sq. ft. in Cainiao Smart Gateway.

Warehouse vacancy rose 0.2-ppt to 5.6% and is set to increase further as tenants downsize in their current premises.

Growing vacancy pressure ensured warehouse rents dropped 1.1% quarter-on-quarter, the first quarterly decline since Q4 2020.

Samuel Lai, Executive Director, Head of Advisory & Transaction Services – Industrial & Logistics, CBRE Hong Kong: “The industrial sector has witnessed the softened leasing volume for the third consecutive quarter mostly due to the slow recovery of the Chinese economy. The quarter saw limited leasing demand mostly coming from the trade and logistics sector. While global economic headwinds may not support a rapid recovery in overall demand, the uptick in local retail sales is likely to fuel an increase in demand for storage space this year. Also, there will be relocation demand from the brownfield land resumption in the Northern Metropolis.”