Warehouse rents rise by unremarkable 2.8% in Q1

Growth was seen in peripheral areas.  

According to Savills Research, the warehouse sector was the only one which recorded any sort of rental increment among all property sectors in Hong Kong, with rents increasing by 2.8% in Q1/2014.  

Rental growth was mainly driven by warehouses in peripheral areas such as Tuen Mun and Yuen Long, where rents were playing catch-up, with virtually no vacancy during the quarter.  

Here’s more from Savills:  

The largest leasing deal completed in the quarter was in Tuen Mun, where UTI Logistics Centre at 18 Hoi Wah Road was leased by a German logistics company for around HK$1.95 million.  

With a GFA of around 168,000 sq ft, the gross rent is around HK$11.6 per sq ft, a new high for logistics properties in the area. The high rent may be due to good building specifications (5.45 m floor-to-floor height, full loading/unloading facilities on the G/F and ample parking spaces on the rooftop).  

The owner, Fortune Pharmacal, was expected to occupy the space when the UTI lease expires later this year. Instead, they have acquired a 200,000-sq ft factory in Yuen Long Industrial Estate for pharmaceutical manufacturing.  

We also noted a few smaller leasing deals completed for Kerry’s portfolio, most of them with end users, as 3PLs typically avoid leasing Kerry’s space due to direct conflict with its logistics operation.  

In Q1/2014, there were still large 3PLs, most of them representing different retailers, actively looking for space ranging from 20,000 sq ft to 200,000 sq ft. However, few such spaces were immediately available and many of them were looking for space with three- to six-month lead times.