Extremely low vacancy rate shooed local warehouse operators away

While warehouses in the New Territories attracted.

The second quarter of 2014 saw strong demand for warehouse space, with both logistics operators and end users keen to secure new space either for expansion or to save on costs.

According to a research report from Savills, with vacancy still at extremely low levels (below 1%), many such tenants were forced to renew at rents offered by aggressive landlords.

Meanwhile, some smaller sized tenants had to relocate as their space was ‘booked’ by large in-house tenants upon their lease expiries.

Here's more from Savills:

WKK was forced out of Kwai Chung Centre to Kerry Godown, Sha Tin to take up 28,000 sq ft at around HK$11 per sq ft, while another logistics operator, Wo Kee Hong relocated from Tuen Mun Distribution Centre to another warehouse in the same district for HK$ 9 per sq ft.

The 1 million-sq ft SF Express logistics centre is near completion and is expected to provide major relief to the current tight supply situation.

Nevertheless, rumours are that no deals have been struck for the centre so far and it remains vacant for the moment.

With supply remaining low, more and more local operators/end users were considering relocating to one-story sheds (basic warehouses) in the New Territories for business expansion/cost savings, bearing in mind the risk of the illegal usage of such sites.