Leasing demand in China's premium logistics warehouse market saw moderate growth in 2024, supported by traditional e-commerce festivals, expansion of cross-border e-commerce, and sustained pro-consumption policies. However, a surge of new project completions throughout the year provided tenants with greater options, while intensifying market competition. To maintain healthy occupancy rates, landlords adopted the strategy of trading leasing space area for lower rentals. Consequently, the premium logistics warehouse rental level declined, with vacancy rates remaining elevated in certain regions and cities.
For the full year 2024, the industrial/logistics sector’s share of total investment transaction volume was at 21%, up from 14% in 2023. Ahead, the deployment of large scale AI models is expected to reshape the industrial logistics market across warehousing, transportation, and customer service fields. These advancements are poised to drive further evolution in the investment landscape.
Chinese Mainland
- The total stock of premium logistics warehouse space on the Chinese mainland reached 126 million sq m in Q4 2024.
- Approximately 905,000 sq m of new supply entered the Chinese mainland logistics market in Q4.
- The overall vacancy rate dropped 0.2 percentage points q-o-q to record 17.8%.
- Overall average rents fell 0.5% q-o-q to RMB31.1 per sq m per month.
- Ahead, an additional 29.88 million sq m of new supply is scheduled for completion by the end of 2027.
Hong Kong China
- Hong Kong’s total stock of premium logistics space remained at 35.3 million sq ft (3.27 million sq m) in Q4 2024.
- The Hong Kong overall prime warehouse vacancy rate stabilized at 7.6%, down 0.2 percentage points q-o-q. The overall prime warehouse rental level retreated by 1.3% q-o-q to record HK$15.0 per sf per month in Q4, the steepest quarterly downward adjustment since Q3 2020.
- Looking ahead, mid- to short-term new supply will remain scarce, with no further major new logistics projects to be seen before 2027. As such, we expect the vacancy rate to remain stable in the coming 1–2 years, and we forecast the prime warehouse rental level to fall by 5% through 2025.
Taiwan China
- Total premium logistics stock increased to approximately 1.10 million pings (3.64 million sq m).
- Incoming supply is expected to add 246,135 pings (813,670 sq m) of new stock by the close of 2026, an expansion of approximately 22.4%.
- Around 83% of stock is concentrated in Taoyuan City, close to Taoyuan International Airport. The average monthly rental level increased to approximately NT$700–850 per ping.
Outlook
Looking ahead, leasing pressure from new supply remains significant. If all planned projects enter the market on schedule, the influx of new supply will likely exert downward pressures on rental growth in the medium term while pushing up the overall vacancy rate. Landlords may further temper rental expectations and continue the strategy of trading leasing space volume for lower rentals in order to maintain healthy occupancy levels.
