APPD Market Report Article

Beijing

November 29, 2022

Mi Yang, Head of Research, North China

3.7%

RMB 1.76

Rents
Rising

Absorption of surrendered areas reflects demand equilibrium

  • The supply chain, e-commerce and manufacturing industries continued to show stable demand. Landlords actively adjusted their tenant mix, reducing the breadth of industries covered among their tenants, such that economies of scale for resource sharing could be realised.
  • Due to operational risks, distributed mini warehouses for fresh food e-commerce have had to surrender their leased space at multiple logistics spaces in Beijing. However, strong demand from alternative industries have quickly filled the space, and overall market vacancy remains unaffected.

New supply wave mostly absorbed; market vacancy at 5.4%

  • New completions of more than 65,000 sqm were added to total stock in 2022, and started operations in the quarter. All conventional, new and high-standard warehouses were pre-leased before entering the market. Therefore, the vacancy rate remained healthy at 5.4% in the quarter, a slight increase of 1.3 percentage points (ppts) from 2Q22.
  • New buildings were positioned to be diversified, focusing on the coordination of business ecology and retaining of interfaces for tenants’ special hardware requirements. The main aims were to increase the far-volume ratio and the efficiency of storage land utilisation.

Upscale new projects boost rent growth

  • The entry of new high-standard warehousing projects into the market has led to a slight increase in overall rents, illustrating the strong leasing capacity of the market.
  • Overall average market rents recorded a 1.1% q-o-q growth at RMB 1.76 per sqm, per day, due to a high rental base as well as built-to-suit premium charges for new projects.

Outlook: Released land supply provides new opportunities

  • Within 2022, about 263,500 sqm of new supply is expected to enter the market, but the vacancy forecast will likely continue to be low due to strong absorption power from stable pre-leasing demand.
  • The capital logistics highland, Jingping Logistics Hub, recorded three land transaction deals, totalling more than 100,000 sqm. The Jingping area is expected to see more interest from investors and operators.

Note: Beijing Logistics & Industrial refers to Beijing's prime non-bonded logistics market.

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