Renew or relocate: What did Hong Kong logistics operators do in Q3? 

Some operators opted to renew as early as 9 months before their lease expired.

As local trading and retail market conditions become more stable, many logistics operators who wanted to avoid business disruption opted to renew their leases as early as 9 months before expiry during the third quarter of 2021. According to Savills, modern warehouses in both Kwai Tsing and Tsuen Wan as well as general warehouses in Tuen Mun all recorded a number of renewal cases of long-term tenants. 

Meanwhile, those who needed a larger space had to relocate. Savills says a large local 3PL moved from an en-bloc warehouse (around 110,000 sq ft) in Fanling and relocated into another enbloc warehouse (230,000 sq ft) in Tsuen Wan, almost doubling in size. The original warehouse was then leased to iAdvantage and will be converted into a data centre. Crown Worldwide also relocated to take up three floors (around 120,000 sq ft) in Tuen Mun Distribution Centre with a long lease. 

Here’s more from Savills:

In addition to 3PLs, other logistics operators were on the move: 100 Storage Cold-Chain Logistics Services relocated from Hing Wai Ice & Cold Storage and leased two units on 6/F (around 120,000 sq ft) of Hutchison Logistics Centre in Kwai Chung for around HK$2 million per month (around HK$16.5 per sq ft). A department store operator also relocated to take up 60,000 sq ft in TS Gateway in Tsing Yi while Vestiaire Collective, an online fashion retailer, relocated and took up around 20,000 sq ft in China Merchants Logistics Centre in Tsing Yi. 

As such, overall and modern warehouse rents continued to rebound by 2.1% and 2.5% in Q3/2021 respectively, while both overall and modern warehouse vacancy rates declined to 3.2% and 2.6% over the same quarter, after seeing a small spike last quarter.