Chinas’ Logistics real estate bounces back, however there is a catch

CBRE’s Executive Director of Industrial and Logistics Services, Asia – Andrew Hatherley predicts higher rents and fewer available properties over the next 12 months.
 
Just focusing on Shanghai, average Logistics rents fell approx 16% during the Recession, however the last 3 Qs have all seen growth to a total of just over 6%.
 
CBRE expects that this rental growth will accelerate rapidly during the next 12 months due largely to……
 
A) vacancy rates dropping on the back of increasing demand and
 
B) the effect of virtually no new  International Grade warehouse construction in the past 2 years.
 
The increased demand for warehousing space is coming from higher levels of local consumer consumption coupled with much improved Export levels ( now back to early 08 levels )
 
Most other major cities in China are also enjoying rental growth, inc Beijing which has improved by 3.1% in the 1st half of 2010 with solid volumes.
 
Mr Hatherley believes these factors are leading many of the major Logistics Development companies to bring forward plans to restart projects in Q4 of this year.  However, taking into consideration the likely construction time, the first of these new warehouses wont be available for occupancy until well into 2011
 
Given the above, CBRE predict that 2011 will be a challenging year, real estate wise, for 3PLs and Logistics companies as rents will rise quickly and available warehouse options will dry up fast.
 
Current estimates by CBRE show Logistics rental rates for new leases could rise by up to 20% in the next 12 months.

Article Courtesy of http://www.supplychains.com