HK warehouse rents to fall 5% as 9 million sq ft supply looms

Upcoming supply over the next three to five years will fuel competition.

Hong Kong’s warehouse rents are forecast to decline by a further 5% in 2026 as a massive wave of new supply prepares to hit the market.

“Tenant-favourable leasing conditions are likely to persist, with limited pricing power for landlords. Warehouse rents are forecast to decline by a further 5% in 2026 amidst elevated incentives and heightened choice for occupiers,” Colliers said in its 2026 market outlook.

Key projects include Modern Terminals Limited Logistic Centre of Wharf, KCTL 531 by ESR and Chinachem, and TYTL 202 by Mapletree, collectively contributing nearly 9 million square feet to the logistics market.

Industrial leasing remained sluggish in 2025 amidst global uncertainties, with warehouse rents falling 8.6% year-to-date. Landlords have become increasingly aggressive, offering non-rent incentives, such as units with air-conditioning installed and renovation subsidies, to attract relocating tenants.

The continued growth of e-commerce is seen to drive the expansion of leasing demand in Hong Kong’s industrial sector in 2026.

“The ultra-low- cost offering by Chinese Mainland e-commerce giants such as JD.com, Pinduoduo and Taobao is normalising high-frequency, low-cost online shopping for daily necessities, increasing fulfilment intensity and supporting demand for logistics space,” Colliers said.

“Industrial leasing will remain tenant-market in 2026 as substantial new supply is anticipated to enter the market. Whilst e-commerce growth will provide some support, landlords must adopt creative incentives and flexible terms to stay competitive in an environment where pricing power is limited,” said Fiona Ngan, head of Occupier Services at Colliers Hong Kong.

The Development Bureau (DEVB) has established the Hung Shui Kiu Industry Park Company Limited. This new entity will oversee the development and operation of an approximately 23-hectare industrial park in the Northern Metropolis, designed to support high-value-added and strategic industries.

“The DEVB will soon seek Town Planning Board approval to rezone these sites to accommodate advanced construction and smart production, alongside supporting facilities including research, testing and certification, convention spaces, and talent accommodation,” Colliers said.

“The initiative represents a critical step in diversifying Hong Kong’s industrial base, potentially unlocking new demand drivers beyond traditional storage and distribution in the long term,” it added.