Warehouse vacancy in industrial properties predicted to remain low

How badly will rentals be affected?

While warehouse vacancy in Hong Kong's industrial sector is projected to remain at relatively low levels, it has been noted that more space being made available to the market in the first two quarters of 2015 should be expected.

According to a research note from Savills, these will be mainly from modern warehouses in Kwai Chung / Tsing Yi, due partly to the imminent completion of SF Center in Tsing Yi.

While Savills expects much of this ‘released’ space will eventually be renewed by existing tenants, it also feels that landlords within the terminal area may face some pressure in rental terms.

Thus, it said, rents of modern warehouses may remain flat over the first half of 2015, ticking up in the second half when this space is absorbed and SF Center is fully let.

Here's more from Savills:

We expect the investment market to remain cautiously optimistic, with limited stock available and end users keen to secure whatever spaces are available to stabilise occupation costs.

While industrial prices are already at a record high, with an interest rate rise not likely until the end of the year (and any increment is likely to be minimal anyway) and limited new supply coming on stream, we expect industrial prices to rise by another 5% to 10% for the full year.