Leasing demand for warehouses on the rise

Some logistics operators have already pre-committed yet-to-be vacated warehouses due to the current high occupancy level.

The steady local retail sales performance is driving continuous demand for warehouses from third-party logistics companies. Ramp access warehouse premises with sizes in the range of 50,000 to 100,000 sq ft are preferred in the market.

Here's more from the research by Colliers International:

The strong local retail sales performance continued to support the warehouse sub-sector. The demand from third-party logistics companies for warehouse premises remained steady in 1Q 2012. Some major corporations are seeking to outsource their logistics functions. A group of third-party logistics companies has been searching for quality warehousing premises in order to capture the demand growth for logistics services from the outsourcing activity. According to research, these third party logistics companies are looking for ramp access warehouse premises with sizes in the range of 50,000 to 100,000 sq ft.

Interlink, a new logistics warehouse development in Tsing Yi, which officially opened in March 2012, is fully occupied. Research shows some of the tenants of Interlink will relocate their operations to the new facility while releasing portions of their existing warehouse premises back to the marketplace. In view of the current high occupancy level in prime quality warehouse premises, some logistics operators have pre-committed to these yet to be vacated warehouse premises. There are no existing ramp access warehouses of 50,000 sq ft or above available in the marketplace.

On the factory market front, more landlords opted to convert the whole block of their industrial buildings for other uses. These property owners plan to vacate their buildings in order to carry out the conversion works. As such, the tenants in those buildings are looking for suitable premises for relocation, stimulating the industrial leasing market activity. However, this group of occupiers are seeking premises with sizes similar to their existing addresses.

Interlink completed

The occupation permit of Interlink at 39 Tsing Yi road, Tsing Yi was issued in January 2012. Due to strong demand from the tenants, all of the space was pre-committed prior to its physical completion.

Construction of three developments started

During the period from november 2011 to January 2012, construction work commenced on three industrial developments. Among these developments, the warehouse project at 52-62 Tsing Yi road will be retained by Tien Chu for owner-occupation.

More logistics development projects in Tsing Yi

In addition to the interlink, more logistics warehouses have been planned in Tsing Yi. The plot at Tsing Yi Hong Wan road, designated for logistics development, was awarded to Goodear Development Limited in December 2010. In January 2012, the Buildings department approved the building plan for developing the site into a 15-storey over one basement level building, providing a total gross floor area of about 1.1 million sq ft. In February 2012, a second plot for logistics development at tsing Yi Hong Wan Road was awarded to China Merchants Holdings. Upon completion, the size of the future logistics warehouse on the plot will be approximately 1 million sq ft. China Merchants Holdings plan to retain the development for owner-occupation. According to government figures, the stock of warehouse premises as of the end of 2010 was about 37 million sq ft with 40% of the total or 15 million sq ft located in the Kwai Tsing district. The completion of Interlink and the two future logistics warehouse projects at Tsing Yi Hong Wan road will further strengthen Kwai Tsing as the logistics hub of Hong Kong.