Hong Kong warehouse rent increase rate highest in the world

Limited supply plus booming demand is pushing warehouse rents in Hong Kong to new heights.

Warehouse rents rose 8.1% in the last six months of 2011, the highest growth amongst the top 10 markets, according to the Global Industrial Highlights recently released by Colliers International.

The warehouse rental growth spike in Hong Kong is largely attributable to the limited stock availability situation, said Simon Lo, Executive Director of Research & Advisory, Asia at Colliers International.

“On top, Hong Kong has also been receiving heavy interest by both overseas and local logistics operators following the government’s initiative to revitalise industrial buildings in Kowloon East. Prime warehouse premises with ramp access are the current hot favourites.”

Industrial warehouse rents in Hong Kong were the world’s third most expensive after Tokyo and London-Heathrow at the end of 2011. Singapore was the fourth most expensive.

Rents, however, are expected to ease in the coming months. Lo forecast a 4% drop in
industrial rents on the premise that end-users will likely adopt a more prudent outlook amidst mixed global sentiments that will create the downward adjustment pressure on rents.

Elsewhere in Asia Pacific, almost every market recorded a drop in warehouse vacancies in the second half of 2011. In addition, prime warehouse rents grew in more than half of the markets, amongst which observers in over 50% of them expect warehouse rents to rise further in the next six months.

In North America, warehouse vacancy rate dropped to 9.7% in 4Q 2011 due to the growth of manufacturing and distribution industry.

The outlook for global warehouse market trends is positive. Greater demand for warehouse space is expected with rising global trade. Colliers expects this rising trend to continue in most markets of these two regions in the coming year.

Colliers International is a leading real estate services firm with more than 12,500 professionals operating out of 512 offices in 61 countries. The Lipsey Company and National Real Estate Investor magazine ranked Colliers International as the world’s number two commercial real estate brand.