Cushman & Wakefield Releases 2021 Global Logistics Outlook
Key Growth Drivers Point to Positive Outlook for China Logistics Sector
Hong Kong Ranked Second in Global 250 Warehouse Rental Expense Ranking
Cushman & Wakefield (NYSE: CWK), a leading global real estate services firm, has released its 2021 Global Logistics Outlook. The report analyzes key drivers affecting growth, global leasing dynamics and provides an outlook for the sector.
“The unprecedented disruption caused by COVID-19 pandemic and changing consumer behaviors has reshaped the future of the logistics industry by exposing global supply chain vulnerabilities and accelerating technological advances. As a result, a variety of global trends have emerged, propelling the sector forward in new ways,” said Cushman & Wakefield’s Jason Tolliver, Investor Lead, Logistics & Industrial Services, Americas.
The Outlook report finds a number of key growth drivers now affecting the global logistics market, including demographics and urbanization, E-commerce expansion, new connectivity through infrastructure, and supply chain resiliency. Analysis of these factors shows that Greater China is well positioned to reap rewards from the disruption seen in the industry.
“The China market is poised to capitalize on the key drivers we see emerging in the logistics industry globally – be it continuing urbanization, sustained high online sales growth, Belt and Road Initiative infrastructure, or China manufacturers moving up the value chain,” commented Tony Su, Managing Director, Head of Industrial & Logistics Property Services, China, Cushman & Wakefield.
By warehouse rental expense, the report finds seven China markets ranked inside the top 100 globally. Hong Kong is ranked second, followed by Beijing at 47, Shenzhen at 24, Shanghai at 72 and Guangzhou at 82. Foshan and Kunshan round out the China group at 98 and 99 respectively.
In broad terms, the regional industrial market remains resilient. Out of the 34 key markets covered within Asia Pacific, 15 are considered landlord-favorable with six being tenant favorable and the remaining 13 in neutral territory. The status quo has largely been maintained year-to-date, with only Singapore showing any significant change to becoming more tenant friendly, though this is restricted to certain parts of the industrial market. This is in stark contrast to the office sector within the region, which has seen a much more definitive shift towards more tenant-friendly conditions.
“Industrial rents have shown steady growth in the year-to-date in key Indian and South East Asian markets where rents in Delhi, Ho Chi Minh City, Kolkata, Jakarta and Hanoi have all increased by over 2.5%. Rents have been held broadly flat in Australia while they have seen a slight uptick of 2% in the Chinese logistics market, due to boosted demand from online shopping soaking up some of the vacancy,” said Dr. Dominic Brown, Global Head of Demographic Insights, APAC-lead for Cushman & Wakefield. “Markets like Hong Kong and Singapore rank second and fifth respectively on the most expensive list, despite being under great downward pressure from suffering weaker re-export demand.”
The North American industrial market experienced growth despite the COVID-19 pandemic wreaking havoc across the globe, as well as more local disruptions including hurricanes and wildfires. It has proven once again to be one of the most resilient asset types. Although North American new supply outpaced demand for the second year in a row, with 378 million square feet (msf) of completions, demand came in at 287 msf, surpassing 200 msf for the seventh consecutive year.
“COVID-19-induced lockdowns did cause a slight slowdown in demand in the first half of the year compared to prior years. However, even this combined with the large volume of supply has still not been enough to fully satiate tenant demand and to allow vacancy rates to begin to rise significantly,” said Tolliver. “Toward the end of 2020, North American industrial vacancy stood at 4.9%—just a 30 bps increase over 2019 and Canadian markets registered the lowest vacancy rates at 2.5% and Mexico City following at 3.0%.”