Year-round demand remains subdued, despite improvements in Q4 2024

• Demand sentiment was subdued in 2024. Tenants’ widespread caution led to diminished leasing activity due to muted consumption recovery. Although net absorption improved in Q4 2024, recording 139,000 sqm, the full-year result totalled only 20,000 sqm.
• The vacancy rate continued to increase, reaching 25.7% in Q4 2024 amid 214,900 sqm of new supply. Although local 3PL firms continued to take on new leases, overall subdued sentiment during the year resulted in landlords needing more time to lease out large vacancies.

Shanghai logistics market witnesses another record-year of supply

• Three projects reached completion in Q4 2024, with Jiading, Fengxian and Songjiang all recording new projects entering the market. This brought the full-year result to a record 1.35 million sqm.
• While supply was concentrated in west Shanghai submarkets in H1 2024, the supply wave spread to submarkets such as Fengxian in H2 2024, where two projects were completed, accounting for 15% of the space delivered over the year.

Rent growth remains in a downward trajectory

• Overall rents decreased by 4.2% q-o-q on a like-for-like basis to RMB 1.42 per sqm, per day, reflecting a 7.8% decline over 2024. The elevated vacancy level intensified competition among landlords, prompting aggressive pricing strategies to fill vacancies.
• The investment market was quiet in Shanghai over 2024. Investors exercised caution when making investment decisions due to this year’s surges in supply and subdued demand.

Outlook: De-stocking will remain the key theme over the short-term

• Supply pressure is expected to moderate in 2025 after surpassing 1.0 million sqm for two consecutive years. However, the absolute supply level remains above the ten-year average, which is likely to keep vacancy rates elevated in the short-term.
• Competition among landlords is expected to persist, with de-stocking remaining the primary focus. Rents are anticipated to continue trending downward in the short-term, although the rate of decline is expected to soften.