Industrial lease renewals to dominate in H2 2025: report

Lease renewals dominated leasing activity in Q4 2024.

Lease renewals in the industrial segment are expected to remain prominent in the second half of the year (H2 2025), according to the Colliers 2025 Market Outlook report.

Lease renewals dominated leasing activity in the fourth quarter of 2024 (Q4 2024), resulting in a slight decrease in warehouse rent of 0.9% quarter-on-quarter (QoQ). This contributed to a year-on-year (YoY) decrease of 5.5%.

In addition, whilst rising vacancy will remain a concern, the report noted that landlords have less incentive to lower rents as industrial tenants are generally reluctant to relocate, compared to office tenants.

“Therefore, we expect warehouse rents to decrease by a moderate rate of 4% in 2025,” said Fiona Ngan, head of occupier services at Colliers Hong Kong.

Moreover, Hong Kong’s logistics sector will see limited new supply, with the only scheduled supply being the 1.485 million sq. ft. coming from the cold storage and logistics site at the junction of Mei Ching Road and Container Port Road South in Kwai Chung, slated for completion by 2027.

Long-term supply over the next five to 10 years will come from government tenders for three logistics sites, including two multi-storey building (MSB) sites in Yuen Long and one logistics site in Tsing Yi. All three tenders close in the first quarter of 2025 (Q1 2025).