APPD Market Report Article


May 31, 2022


RMB 1.54


Overall leasing remains stable while submarkets see divergence

  • Overall leasing sustained its momentum in Shanghai’s logistics market despite the recent COVID-19 outbreak. Net absorption reached 83,500 sqm over the quarter, causing the non-bonded vacancy rate to fall from 9.7% to 8.5%.
  • Market sentiment diverged across submarkets. While East Shanghai submarkets such as PVG remained tight, some submarkets in West Shanghai were potentially facing pressure due to sheer amount of supply in the short term. Meanwhile, some tenants were considering satellite cities as alternatives to the elevated rents in mature West Shanghai submarkets.

No new completions in quiet first quarter

  • Though demand remained resilient, supply paused this quarter with no new completions. A large number of projects are scheduled to be delivered over the remainder of the year; however, this could exert upward pressure on vacancy.
  • Seven projects totalling 803,000 sqm of logistics space are scheduled to deliver before the end of 2022. The new projects will be concentrated in submarkets like Qingpu and Songjiang.

Rents continue to grow as demand momentum persists

  • Shanghai rents maintained their rising trajectory on the back of solid leasing demand. Rents rose 0.7% q-o-q this quarter to RMB 1.54 per sqm per day, with y-o-y growth of 3.8%. Rents grew in almost all of the city’s submarkets.
  • ESR acquired a portfolio of properties with total GFA of 550,000 sqm from DLJ. The portfolio included warehouses in the Greater Shanghai markets of Hangzhou, Taicang, Suzhou, Kunshan, and Shanghai itself. Investors maintained high levels of interest in China logistics assets, especially in core markets like Shanghai.

Outlook: Large supply expected in 2022

  • While new supply in Shanghai took a breather this quarter, annual supply for the full year 2022 is expected to come in at a high level similar to that of 2021. That said, demand is expected to remain resilient and should support continued growth in rents despite an expected uptick in vacancy.
  • While the recent local outbreak would slow the recovery of the local economy and consumer market, logistics demand is likely to persist as the market has proved its resilience since 2020. 3PLs are expected to continue to drive demand, and we foresee continued expansion by firms in emerging sectors like cold chain as well.

Note: Shanghai Logistics & Industrial refers to Shanghai's modern warehouse facilities.

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