competition intensifies in the premium logistics market in the face of the covid-19 outbreak
mar 25, 2020
shanghai, 25 march 2020 – the covid-19 coronavirus outbreak has presented serious challenges to china and to the rest of the world. following the lockdown of wuhan, further cities in china implemented strict measures to contain the virus. consequently, the secondary and tertiary industries suffered, and the logistics sector, heavily reliant upon them, has been hit hard, according to “greater china logistics market 2019 q4”, the report published by cushman & wakefield.
by the end of q4 2019, mainland china’s premium logistics stock reached 60 million sq m. the overall vacancy rate hit 12.1%, up 0.5 percentage points q-o-q. average monthly rent was up 0.7 percentage points q-o-q, at rmb 35.2 per sq m. and by the end of 2022, an additional 40 million sq m of new premium logistics supply will be completed.
submarket performances in greater china are as follows:
north china: in 2019 total new supply delivered in north china reached 1.3 million sqm. the warehouse rental market has experienced relatively strong downward pressure. in q4 the average occupancy rate was is 88.5%. due to new logistics parks coming into the market, average rent dropped 1.2% q-o-q to rmb 35.3 per sqm per month. as beijing city removed low graded warehouses, demand for premium logistics warehouse extended to hebei and tianjin.
east china: in q4, 13 new projects launched in east china. due to the huge new supply and registration and taxation requirement for leasing premium logistics warehouse, absorption was slowed. in q4, the average occupancy rate was 90.5%.
south china: supply and demand forces have pumped up rental levels. in q4, the average occupancy rate was 91.9%. the greater bay area plan has promoted the further development of trade, transport, shipping and other industries. as economic integration across the gba deepens, this could stimulate further demand for logistics and warehousing properties for the area.
central china: the competition in central china is intense, although the market exhibits great potential. in q4, the average occupancy rate was 90.5%. by the end of 2025, with the scheduled completions of the new ezhou and wuhan tianhe airports these markets can be expected to attract many logistics service enterprises, logistics real estate developers, e-commerce and cold chain enterprises.
southwest china: available supply is huge in southwest china. in sichuan, chongqing, guizhou and yunnan approximately 900,000 sq. m of new supply entered the market. in q4, the average occupancy rate was 72.5%.
hong kong: overall warehouse rentals are expected to remain stable in 2020, thanks to an extreme low-vacancy environment and continued leasing demand from 3pls and data center operators.
taiwan: around 72% of the current stock is concentrated in taoyuan city near to the taoyuan international airport. rental levels remain stable and demand for logistics stock is expected to keep growing.
foreign developers have shifted their focus into the core areas logistics land, and logistics assets with upgrading and converting potential. e-commerce players, express delivery operators and developers are focusing on areas beyond the core areas and regions, and continuously growing their presence in provincial capitals and transportation and hub cities.
“in recent years, the premium logistics warehouse (plw) market in china has been driven by the unstoppable rise of e-commerce, and we expect that the impact from covid-19 on plw demand will be limited and can be managed. broadly speaking, covid-19 should not severely curb demand for premium logistics warehouse services. the release of white paper: industrial development and integration in the yangtze river delta will stimulate the potential of the north of jiangsu, south of zhejiang and hinterland of anhui. as trading activities grow within the belt and road countries, shannxi, gansu, qinghai and xinjiang, as strategic key areas, have received interest from a number of developers,” remarked tony su, managing director, head of industrial & logistics property service, china, cushman & wakefield.
click to read the full report.
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about cushman & wakefield
cushman & wakefield (nyse: cwk) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. cushman & wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. across greater china, there are 22 offices servicing the local market. the company won four of the top awards in the euromoney survey 2017 and 2018 in the categories of overall, agency letting/sales, valuation and research in china. in 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. to learn more, visit www.cushmanwakefield.com or follow @cushwake on twitter.
for further information, please contact:
mandy qian
director, marketing & communications, greater china
tel: 86 10 8519 8040
mandy.qian@cushwake.com
