Hong Kong warehouse rents inch up 1% in Q3
This is caused by improved occupancy and lower space availability.
According to a recent report by CBRE, aggregate trade in Hong Kong rose by 26.8% y-o-y in July and August combined, meaning that Q3 2021 is likely to mark the third consecutive quarter in which growth has exceeded the 20% y-o-y threshold. Trade flows during these two months were largely facilitated by airfreight, with volumes rising 14.2% y-o-y over the same period. In contrast, container throughput dropped 2.8% y-o-y.
Lower space availability is partly to blame for the slowing leasing momentum in Q3. E-commerce-related 3PL operators and tech-related firms still dominated much of the transactions in the industrial sector, with some activity from supermarkets and department stores.
CBRE says warehouse vacancy slipped 0.2ppt to 3% over the quarter. The decline in vacancy was most prominent in ramp-access buildings where vacancy fell from 3.1% to 2.5%. Warehouse rents increased 1.0% q-o-q in Q3 2021 due to a combination of improved occupancy and lower space availability. This brings year-to-date growth to 2.9%.
Samuel Lai, Senior Director, Advisory & Transaction Services – Industrial & Logistics, CBRE Hong Kong, said: “With trade demonstrating a strong growth year-to-date, it’s not surprising that the industrial market is the best performing sector in the commercial real estate industry. Another interesting point to note is that, due to an increase in airfreight cost, logistic operators are trying to shift the cost from transportation to warehouse rental, causing the sector to continue to outperform others in terms of both vacancy and rent. The market ratio of e-commerce had grown significantly since the beginning of the pandemic, increasing the demand for warehouse space and combined with the fast diffusion of 5G technology, driving the sustainable growth of data centres.”