Forced relocations buoyed industrial transactions in Q1

A local beverage company secured a site in Tuen Mun in light of possible relocation from Yuen Long.

Forced relocations sustained industrial leasing activity in Q1 as a total of six en-bloc buildings were sold in Q1, according to CBRE Hong Kong market view.

This comes as a local beverage company secured over 300,000 sq ft in Tuen Mun in light of possible forced relocation from its original site at Yuen Long. It sold its factory at Lai Sun Yuen Long Centre for $1.4b at a price of $3,611 per sq ft. Other notable deals include the $610m purchase of MapleTree in the remaining stake of Ever Gain Building in Sha Tin. 

Third party logistics companies also buoyed demand as SF Express reserved 44,000 sq ft in its own building in Tsing Yi for expansion whilst DHL eCommerce leased 34,000 sq ft in Dynamic Cargo Centre in Tsuen Wan.

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Takeup remains robust in Q1 as warehouse vacancy fell to 4.7%. “The low vacancy environment meant landlords were under no immediate pressure to lease out space,” CBRE added, as some landlords of cargo-lift access buildings deliberately left space vacant amidst expectations of upgrade demand from larger occupiers like data centres and tech users.

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Overall warehouse rents inched up 0.2% QoQ with steady leasing activity in New Territories West raising rents for cargo-lift access facilities by 1.4% QoQ whilst rents for ramp-access buildings dipped 0.5%.

Rents for flatted factories rose 0.6% QoQ whilst rents for I/O buildings stabilised after declining for three consecutive quarters.

“Overall the market benefits from the upbeat trading activities and it is evident in the proliferation of third party logistics companies such as SF Express and DHL. But its outlook is clouded by a possible China-US trade war, in particular due to the fact that a considerable amount of Chinese exports go to the US through Hong Kong. We should all keenly watch the development," said Samuel Lai, Senior Director, Advisory & Transaction Services – Industrial, CBRE Hong Kong.