What’s to blame for the lacklustre logistics demand growth in Hong Kong in Q3?

Warehouse rental growth slowed to 0.2% during the quarter.

According to CBRE, leasing momentum in Hong Kong’s industrial property market slowed further this quarter amid limited space availability and softening demand. 

Vacancy edged up to 2.7% due also to the completion of one new logistics centre in Tuen Mun.

Here’s more from CBRE:

Demand was mainly driven by a select number of retailers. Other activity included a data centre operator pre-leasing 150,000 sq. ft., which accounted for most space in an upcoming building. 3PLs remained inactive.

Weaker leasing demand ensured warehouse rental growth slowed to 0.2% quarter-on-quarter in Q3 2022 after rising 2.5% quarter-on-quarter in the preceding quarter, bringing year-to-date growth to 4.9%.

Samuel Lai, Executive Director, Advisory & Transaction Services – Industrial & Logistics, CBRE Hong Kong: “Reduced global aggregate demand stemming from currency depreciations, interest rate hikes and concerns over the possibility of global recession has slowed logistics demand growth in Hong Kong in Q3 2022. Leasing demand for industrial space is expected to remain soft in the remainder of the year. The improvement in retail market sentiment, however, will ensure retailers and related 3PLs re-assess their expansion needs. Logistics space vacancy is expected to stay at low levels. Rents will likely hold broadly flat in the months ahead.”