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Industrial warehouse rents to decline by up to 5% in 2025: CBRE

Rising trade tensions are set to dampen leasing demand and rental performance.

Warehouse rents in the industrial sector are expected to fall within a 5% range in 2025, according to Samuel Lai, executive director and head of Advisory & Transaction Services—Industrial & Logistics of CBRE Hong Kong.

“Industrial leasing sentiment, in general, weakened in 2024 against low base aggregate trade growth,” said Lai. “As we look ahead to 2025, trade tension escalation is set to weigh on both leasing demand and rental performance.”

In 2024, the full-year new leasing volume contracted 0.5% year-on-year (YoY) to 3.1 million sq. ft., the lowest since 2014, according to CBRE Hong Kong’s 2025 Market Outlook.

Emerging consumption trends fuelled swift growth amongst e-commerce operators, who leased 783,400 sq. ft. of space in 2024, representing 26% of the year’s total leasing volume.

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Whilst warehouse vacancy fell 0.9 percentage points (pp) quarter-on-quarter (QoQ) to 7.5%, the repositioning of some space during the year led the overall vacancy to rise by 2.2 pp YoY, up from 5.3% in Q4 2023.

Sustained vacancy pressure led warehouse rents to drop by 1.1% QoQ, bringing the full-year decline to -4.6% YoY, the sharpest annual fall since 2020.

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