Warehouse rents may recover by 5% as e-commerce drives air shipping demand

External trading volumes also picked up signaling the market’s gradual normalisation.

The industrial market’s lacklustre year may soon be coming to an end as warehouse rents are expected to pick up by as much as 5% next year, according to a news release from JLL.

“Warehouse rents are expected to stabilise and return to growth in 2018, increasing in the range of 0-5%, against steady improvements in the external trading sector. But cost containment will remain a key theme for occupiers,” said JLL Head of Research Dennis Ma.

Warehouse rents have retreated 3% in 2017 and vacancy rate in prime warehouse rose to 4% this year as new supply continues to accumulate although rents of I/O and flatted factories increased marginally by 1.7% and 2.1% respectively.

However, a recovery in external trading volumes appear to signal an impending recovery as air-freight cargo and container throughput rose 10.8% and 8.8% YoY in the first three quarters of the year. 

Moreover, Ma adds that e-commerce sales are slowly translating to stronger demand in the warehousing market as goods sold through online platforms are largely transported by air. 

The completion of the Hong Kong-Zhuhai-Macau Bridge is also projected to boost shipping and air transport demand.

Photo from Axisadman - Own work, CC BY-SA 3.0