Long serving as a key seaport for China, Tianjin has been moving up the rankings as a modern logistics hub in recent years. Thanks to warehouse development along its border with Beijing, where the latest wave of projects completed last year, the city now nears the top of the pack. In 2015, Tianjin increased its supply by more than half of the 2014 level to reach 2.9 million sqm of total stock, making it the nation’s second-largest logistics market overnight – a heavyweight title that it is well-positioned to defend with a steady stream of quality, new supply in the pipeline.
Although the huge amount of new supply caused Tianjin’s vacancy to jump to 21.3% at year-end and rest at 20.6% by end-1Q16, a sizeable proportion of the new supply entered emerging Wuqing, doubling the stock total for the most strategic and promising logistics submarket in the city. Straddling Tianjin and Hebei Province some 80 km from downtown Beijing, Wuqing’s location as a gateway to the Capital Economic Circle otherwise known as Jing-Jin-Ji (referring to the integration of Beijing, Tianjin, and Hebei in North China) has been hugely popular with e-commerce firms and traditional retailers looking to cover all of their respective consumer bases in the region.
Moreover, the quality of warehouse standards set by early foreign entrants such as GLP and Goodman mean that the submarket’s new and future projects will be filled up quickly. Now a major market-mover in Tianjin, Wuqing is also expected to continue to see supply growth through end-2019. This will further attract businesses seeking suitable alternatives to Beijing’s costlier and ever-tight logistics market. Fashion retailer Bestseller and Chinese supermarket Renrenle are among the latest to set up North China distribution centres here, joining the likes of earlier arrivals Amazon and Alibaba.
While traditional manufacturing demand remains a significant part of the market, the e-commerce boom has been a boon for Tianjin logistics. E-commerce firms, retailers, and third party logistics service providers have eagerly entered warehouses, using the city as a base for streamlining distribution channels and moving goods to and from factories and retail stores across the region and country, or even abroad. Online sales for Tianjin and Beijing together totaled 226 billion RMB in 2015, 40%-plus higher than the 2014 figure. Additionally, a growing consumer demographic is expected to comfortably support online sales growth ahead. Currently, some 21 million residents, or just over half of the 40 million people who make up the combined total populations for Beijing and Tianjin, earn in excess of 30,000 RMB annually, what is commonly defined as the consumer class in China. The figure is projected to rise by around 40% to some 29 million consumers between the two cities by 2020.
Thus, there is little doubt that e-commerce firms and traditional retailers will continue to drive the logistics market in the coming years as consumption plays a more prominent role in the national economy. At the same time, an increasing focus on Jing-Jin-Ji will likely bring more infrastructure investment to the region. This will also promote the advancement of modern logistics facilities in Tianjin.
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