China Logistics Leasing Demand Remained Stable In H1 2023

Tony Su, Managing Director, Country Head of Industrial Property Services and Logistics, China, Cushman & Wakefield, said: “The overall rental demand of the logistics market remained stable in the first half of 2023. In terms of logistics rental demand by sector, the manufacturing and consumer sectors contributed significantly to the demand. E-commerce and third-party logistics companies remain the dominant tenants in the high-end warehouse rental market.

Jiangsu, Guangdong and Zhejiang were the top three locations in terms of total inventory in the first half of the year, with each market also expected to see a significant volume of future supply scheduled over the next two years, which will cause some pressure on rentals. But due to the well-developed regional industry and high demand for high-end logistics warehouses, the new projects will actually be leased. Considering the shortage of warehousing land, the high-end logistics warehouse market is expected to witness a long-term positive development trend.

Mainland China Logistics Market

• The total stock of high-end logistics warehouses in mainland China reached 114 million m² in the first half of 2023.
  

• About 5.02 million m² of new deals entered the mainland China logistics market in the first half of the year.
  

• The overall vacancy rate increased by 1.4 percentage points from the fourth quarter of 2022 to 16.5%.
  

• Overall average rents increased by 0.8% from Q4 2022 to RMB 33.8 per m² per month.
  

• Going forward, another 37.98 million m² of new offerings are expected to be completed by the end of 2025.
  

North China Logistics Overview

The high-end warehouse market in northern China recorded several new completed projects in the first half, totaling approximately 1.56 million m² of new space. The average monthly rent increased by 0.5% from the fourth quarter of 2022 to RMB 30.5 per m². The premium warehouse vacancy rate increased by 0.6 percentage points to 19.3%.

East China Logistics Overview

The performance of East China’s high-end warehouse market remained stable in the first half of the year. Compared to the fourth quarter of 2022, the overall average monthly rent increased by 0.8% to RMB 38.5 per m². The overall warehouse vacancy rate increased 3.5 percentage points to 15.3%. The e-commerce, 3PL and express delivery sectors remained the major players in East China’s high-end warehouse market.

Presentation of Logistics in South China and Central China

South China’s high-end warehouse market saw strong demand in the first half of the year. South China recorded 0.8 million m² of new supply in the first half. Compared to the fourth quarter of 2022, the overall vacancy rate fell by 1.1 percentage points to 9.4%, while the average monthly rent increased by 1.6% to RMB 40.4 per m². The high-end warehouse market in Central China remained relatively stable. Compared to the fourth quarter of 2022, the overall vacancy rate fell by 0.3 percentage points to 18.9%. The average monthly rent decreased slightly by 0.7% to RMB 26.4 per m².

Southwest China Logistics Overview

Demand for premium warehouse space in Chongqing remained stable, with the e-commerce, 3PL and manufacturing sectors being the main drivers. The average monthly rent increased slightly to RMB 24.4 per m². Southwest China recorded 0.12 million m² of new supply in the first half. Compared to the fourth quarter of 2022, the overall vacancy rate increased by 1.8 percentage points to 20.4%. The average monthly rent increased by 0.2% to RMB 26.5 per m².

Overview of Hong Kong, China Logistics

Hong Kong’s total inventory of premium logistics space remained at 31.2 million square feet (2.90 million m²) in the first half, with no new supply recorded during the period. A megaproject totaling 4.1 million square feet (0.38 million m²) near Hong Kong International Airport is expected to enter the market in the second half of 2023. A new warehouse project is expected to be completed in Kwai Chung ( New Territories) by 2027. Jointly developed by ESR and Chinachem, the project is expected to span 1.5 million square feet (0.14 million m²). The overall vacancy rate remained stable at 3.4%, while monthly rents increased slightly by 0.5% in the first half of 2023 to HK$14.4 per square foot.

Overview of Taiwan, China Logistics

Total premium logistics inventory increased to approximately 989,000 pings (3.27 million m²).

Incoming supply is expected to add 186,000 pings (615,000 m²) of inventory by the end of 2025, an increase of approximately 18.8%. About 78% of the stock is concentrated in Taoyuan City, near Taoyuan International Airport. The average monthly rental level remained around NT$650-750 per ping.

Shaun Brodie, Head of Business Development Services, East China and Greater China Research Content, Head of Greater China Occupier Research, Cushman & Wakefield, added: “In the future, we expect the government and landlords to favor tenants with higher business efficiency and production volume. With the changing consumption preferences of consumers and, consequently, the structure of demand, the development of the semi-prepared food market will further promote the expansion in “The logistics and storage market of the food chain “The development of complete cold chain parks, integrating production, storage, exhibition and sales functions, will become an emerging market trend.”

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