APPD Market Report Article
ShanghaiFebruary 28, 2023
Daniel Yao, Head of Research, China
Demand remains stable in the quarter
- Leasing activity held steady over 4Q22 with 101,800 sqm of net absorption, bringing the full year total to 336,700 sqm. While net take-up for 2022 was down from 2021’s record high, it still reflected the market’s resilience even as 2022’s COVID-19 flare-ups disrupted economic activity.
- Leasing in the quarter was mainly driven by expansion activities from 3PL companies. For example, one local 3PL leased more than 6,000 sqm in Songjiang submarket while multiple local 3PLs leased a combined total of more than 10,000 sqm in Fengxian. As a result, the market’s vacancy decreased from 9.8% to 9.6%.
New supply for 2022 reaches 332,500 sqm
- New Ease delivered its DNE Jinshan New Material Logistics Park with a total GFA of 62,800 sqm, which was the fourth quarter’s only new completion.
- Five projects were completed over the full year 2022, for a total of 332,500 sqm. Compared to 2021 when most new projects were concentrated in Jinshan submarket, new supply in 2022 was spread across multiple submarkets including Songjiang, Qingpu, Fengxian, and Jinshan.
Rents continue to grow, though at a slower pace
- Resilient demand helped rental growth stay positive in 4Q22. Rents grew 0.86% q-o-q on a like-for-like basis to RMB 1.57 per sqm per day. That said, the large volume of new supply since 2021 has contributed to a slowdown in overall rental growth, with rents up 2.9% y-o-y for 2022 as a whole, versus 3.7% y-o-y in 2021.
- No investment transactions were closed in Shanghai in 4Q22, though both international and local investors remain interested in purchasing core logistics assets, especially in key logistics hubs like Shanghai.
Outlook: Supply pressure is likely to remain high in 2023
- Six projects are expected to be delivered with a total supply of 658,000 sqm over 2023 across various submarkets including Qingpu, Songjiang, and Jinshan.
- However, leasing activity for logistics space is expected to gradually recover as Shanghai moves past the peak of the pandemic.