Warehouse vacancy inches up to 2.7% in Q3

The completion of a new logistics centre in Tuen Mun contributed to this.

The warehouse vacancy increased by 0.4 percentage points quarter-on-quarter (QoQ) to 2.7% in the third quarter, partly driven by the completion of a new logistics centre in Tuen Mun.

In a report, CBRE said the limited industrial space availability and softening demand contributed to the further slowing of leasing momentum in the third quarter

The demand in warehouses was mainly driven by a select number of retailers, whilst the other activity included a data centre operator pre-leasing 150,000 square feet of space, which comprises most space in an upcoming building. Third-party logistics remained inactive.

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Meanwhile, the weaker leasing demand also resulted in slower rental growth of 0.2% QoQ, following a 2.5% QoQ increase in the previous quarter.

“Reduced global aggregate demand stemming from currency depreciations, interest rate hikes and concerns over the possibility of global recession has slowed logistics demand growth in Hong Kong in Q3 2022. Leasing demand for industrial space is expected to remain soft in the remainder of the year,” said Samuel Lai, Executive Director, Advisory & Transaction Services – Industrial & Logistics, CBRE Hong Kong.

“The improvement in retail market sentiment, however, will ensure retailers and related 3PLs re-assess their expansion needs. Logistics space vacancy is expected to stay at low levels. Rents will likely hold broadly flat in the months ahead,” Lai added.

CBRE noted that aggregate trade declined by 12.4% year-on-year in July and August combined, mainly due to the high base of comparison. It said that the market’s export to mainland China and the US was down 15.1% and 11.8% year-on-year, respectively, due to weak external demand and continued economic slowdown in mainland China.