Asia-Pacific warehouse sector continues to show resilience, says Knight Frank
Knight Frank, an independent global property consultancy, has released its Asia-Pacific Warehouse Review for H1 2021 which tracked prime warehouse rents across 17 key cities registering a marginal change of -0.1 per cent half-on-half. Going forward, Knight Frank expects the region’s warehouse sector to remain stable for the rest of the year, with e-commerce continuing to be the main demand driver for new leases.
According to the review, Melbourne and Brisbane experienced the largest quarterly decline in vacancy rates in a decade, while rents in Beijing recorded the sharpest increase in the region, rising 4.4 per cent YoY, as China’s economic rebound gathered pace.
While prime warehouse rents in Singapore fell 3.9 per cent YoY, the outlook for rents is likely to turn bullish, with an expected 3-5 per cent upside for rents in the next six to 12 months.
Tim Armstrong, head of occupier services & commercial agency, Asia-Pacific at Knight Frank, says: “Despite operating under the shadow of the pandemic, warehouse markets across the region have remained largely stable, driven by sustained demand from the e-commerce sector. Recent events that have impacted commitments to customers have put the development of supply chain resilience into focus and major occupiers are responding by re-configuring their strategies by building out inventory buffers and expanding urban distribution nodes. This will have positive knock-on effects for demand to strengthen for logistics spaces. Developers in the region remain on the hunt for opportunities to capitalise on growth trends, indicating sustained confidence in the region’s warehouse markets.”
Christine Li, head of research, Asia-Pacific at Knight Frank, says: “With demand for spaces expected to outstrip supply, the region’s warehouse markets have continued to report strong pre-leasing commitments and rapid take-up of spaces. Digital trends are becoming entrenched and competition in e-commerce retailing has and will continue to intensify. In many instances, expectations have shifted, and customers are now looking for instant gratification with on-demand fulfilment as a strategic necessity. With little brand loyalty in the online world and snap buying decisions made, sales can be lost in a matter of seconds. Building that extensive and adequate supply network is key to preserving and gaining market share. For many players in the e-commerce sector, it is a question of now or never.”