Hong Kong industrial property rents hit new highs

Amid a low vacancy environment.

Industrial property rents across all asset classes have reached new record highs in a low vacancy environment with limited new supply.

According to a release from JLL, in particular, warehouse rents have steadily accelerated, which was attributable to demand growth in properties in non-core locations.

Meanwhile, the release also said that rents of I/O properties and Flattered Factories continued to trend higher in spite of increased supply from newly redeveloped/refurbished properties.

Ricky Lau, National Director and Head of Industrial at JLL Hong Kong, commented, “We expect improvements in the external trading environment and a steady flow of outsourcing requirements to continue to support demand for warehousing space.

In addition, the proposed changes to the transfer of sub-lease interests in industrial estates may lower land supply for specialised factories moving forward. With no immediate new supply until 2015 and still tight vacancy rates, warehouse rentals are projected to grow in the range of 5-10% for the whole year of 2014.”

Here’s more from JLL:

The external trading sector has been on a steady track of improvement, with growth of freight volumes reaching three-year record highs in 2Q14.

Air-freight volumes at Hong Kong International Airport increased by 6.2% y-o-y through January to May, while container throughput at the city’s port grew 3.5% y-o-y over the same period.

The pick-up in external trade and outsourcing requirements saw logistics and Third-party logistics (3PL) return to the warehouse leasing market with vigour.

Demand for warehouses with large floor plates (over 40,000 sqft) close to the city’s container port and at monthly rentals less than HKD 10 per sqft attracted the strongest interest, keeping vacancy in the sector at very low levels.