APPD Market Report Article

Beijing

February 28, 2022

3.6%

RMB 1.71

Growth
Slowing

E-Commerce and logistics tenants remain key sources of demand

  • E-Commerce and logistics tenants continued to be active. Among them, e-commerce giants preferred to acquire additional space at warehouses surrounding those in which they already have a presence. The busy online sales season in the quarter also created a boost in short-term demand from e-commerce and logistics companies.
  • Meanwhile, cold-chain storage demand remained in the market. Landlords reported growing interest from tenants looking for larger spaces over longer terms.

Overall vacancy rate down to healthy annual low of 4.6%

  • No new supply was recorded in the quarter, after two projects scheduled to enter the market at year-end were delayed. The lack of new projects helped to keep vacancy pressures to a minimum.
  • Following a year of steady recovery and four consecutive quarters of positive net absorption, the overall vacancy rate returned to its pre-COVID-19 level at end-4Q21. Settling at 4.6%, the healthy year-end level further demonstrated stability of the market.

Market rent growth for 2021 rebounds, roughly doubles 2020 figure

  • Overall rent growth maintained a modest growth trend in the quarter, rising 0.6% q-o-q in 4Q21. The quarterly growth brought the annual figure up to 3.6% at year-end, enabling full-year growth for 2021 to notably recover and approximately double the 2020 figure.
  • Stable demand coupled with limited supply throughout the year enabled modest rent recovery throughout 2021. High-quality projects in major submarkets as well as competitively priced warehouses in remote areas saw the biggest rents gains in 2021.

Outlook: Continued recovery and steady demand to stabilise market

  • Although more than 170,000 sqm of new projects are scheduled to come online in the first half of 2022, the large supply is not set to significantly weigh on the market. Further market recovery and steady demand should support market stability, further mitigating vacancy pressures.
  • As authorities continue to support green development in the industrial sector, we expect to see more policies promoting photovoltaic and/or digital upgrades that enhance sustainability goals. Landlords who comply will be better-positioned to charge premiums, while their projects are likely to see greater long-term interest from investors.

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

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