COMMERCIAL PROPERTY | Staff Reporter, Hong Kong

Warehouse rents dipped 1.2%

No thanks to slowing demand.

The decline in Hong Kong exports stabilised but retail sales slid at a double-digit rate in August.

According to a research note from Colliers International, warehouse demand has been softening, while factory rental growth should slow due to government review of unauthorised uses.

Landlords have been offering more properties for sale with flexible price terms. Colliers stays pessimistic on the outlook for logistics demand and expect warehouse rents and prices to fall in 2016.

Here's more from Colliers International:

Leasing demand for warehouses has been slowing with no significant expansion recorded in the quarter. A local logistics company committed itself to leasing the whole block of Set Win Automobile Plaza in Yuen Long with a monthly rent of HKD1.22 million due to its proximity to China and cheaper rent.

The average rent was approximately HKD8.5 per sq ft per month based on a gross floor area of 144,000 sq ft. Further to the north, a 30,000-sq ft floor was leased with rent of HKD12.0 per sq ft per month in Kerry Godown (Sheung Shui).

Warehouse rent declined 1.2% YOY given the leasing demand slowing down. Some landlords have prioritise tenant retention over attracting new tenants as some existing tenants have decided not to renew or expand upon lease expiry due to gloomy business outlook.

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