Warehouse leasing market shifts to pre-leasing strategy

Here's how these properties made it.

It has been noted that the warehouse leasing market remained active with pre-leasing becoming a market norm.

According to a research note from Savills, both part of G/F (60,000 sq ft) and 1/F (120,000 sq ft) of Jumbo Plaza in Sheung Shui were pre-leased, with more than one interested party demanding the space.

A car repair operator and Nippon Express eventually leased the space for HK$15 and HK$10 per sq ft, both new highs for a Sheung Shui warehouse.

Meanwhile, some operators decided to make the switch from owner occupier to landlord, given escalating costs and tight availability in the warehouse market.

Tai Hing Cotton Mill Ltd., which owned and ran its own businesses in Tai Hing Industrial Building (510,000 sq ft) in Tuen Mun, decided to cease its own operation at the beginning of this year.

Here's more from Savills:

After reinstating all the floors to a bare shell condition, it began to lease out the space from mid-2014 and received an overwhelming response, with 10 out of 23 floors leased within the quarter, some to relocating logistics operators and end users and some to newly set up operations, achieving around HK$9 to HK$9.5 per sq ft.

This building provided much needed warehouse space to the market. With its imminent completion, S.F. Express’s new logistics centre in Tsing Yi attracted the interest of high quality space users, and five floors were rumoured to be reserved for owner occupation (by S.F. Express and China Merchant respectively) and two more floors have already been pre-committed.

Thus only two floors of this 1 million sq ft new warehouse were available for lease, alleviating any fear of near-term oversupply in the market.