New lease activity remains constrained in Q1 2026

• Despite being limited, new demand in the prime warehouse market was supported by the construction and semiconductor industries.
• Expansion by semiconductor-related operators supported Hong Kong’s strategic vision of becoming a hub for high-value goods, backed by strong operational efficiency and a well-established transport network.

Prime warehouse vacancy rates hit 10.5% in Q1 2026

• Net absorption remained negative for the ninth consecutive quarter, reflecting a continued trend of downsizing.
• There were no completions in Q1 2026.

Investment activity stabilises in terms of transaction numbers

• Investment activity in Q1 2026 was underpinned by an enbloc transaction at Kodak House I in North Point and acquisitions of industrial units by the Urban Renewal Authority.
• Notably, Mainland Chinese investors accounted for approximately 15.6% of total investment volume, suggesting increased interest.

Outlook: Elevated uncertainty in the local storage market

• Given limited trade flows from the Middle East and Hong Kong’s shift away from reliance on sea freight, geopolitical conflicts in the region are less likely to have a significant near-term impact on Hong Kong’s logistics market.
• However, heightened geopolitical tensions may result in delays, re‑routing and the temporary suspension of direct air and sea shipping services, introducing mixed and uncertain implications for local storage demand over the medium term.