China's top-tier warehouse market poised for another decade of growth: JLL

Cao Qian
Driven by evolving consumer trends and technologies, Grade A warehouses will become more mature and more essential over the coming 10 years, a new white paper predicts.
Cao Qian

China's Grade A warehouse stock will continue to expand and develop in the coming 10 years after quadrupling over the past decade, according to an industry white paper by international property adviser JLL.

Between 2010 and 2019, occupied Grade A warehouse stock in China's leading markets rose from some 11 million square meters to around 48 million square meters, representing an annual growth rate of 18.4 percent, JLL data shows.

For the decade ahead by 2030, continued growth in China's consumer sector will support further development of the Grade A warehouse market to make it bigger, more complex, more mature and even more essential than it is today, said the white paper, which includes an outlook on China's logistics market and outlines trends that will allow investors and developers to future-proof their strategies and properties.

"As China's consumer market continues to grow with evolving trends, investors and operators must adapt to changes in how retail sales manifest as warehouse demand," said Richard Huang, head of supply chain and logistics service for JLL in China. "With some of the market's biggest warehouse occupiers increasingly turning to self-use space, it is essential for property owners to consider other evolving and emerging types of tenants."

The long-term robust outlook for China's consumer sector, which is forecast to rise from 41 trillion yuan (US$5.76 trillion) in retail sales last year to 112 trillion yuan by 2030, will continue to propel new requirements for distribution space. Meanwhile, increasingly sophisticated consumers expecting ever-faster omni-channel delivery will also boost tenants' demand for upgrading to modern Grade A warehouses.

China's entire warehousing stock stood at just over 1 billion square meters in 2018, according to estimates from the China Association of Warehousing and Distribution. At that time, for-lease Grade A stock in 24 major Chinese markets tracked by JLL stood at about 51 million square meters, or 4.8 percent of the nation's total.

"Technology will play a decisive role as warehouse occupiers maximize efficiency and this trend will drive occupiers in China's vast network of low-quality warehouses to consider upgrading to Grade A properties," said Warner Brown, research director for JLL in China. "There also will be greater requirements for equipping warehouses for automation, cold chain and other high-tech uses, and operators in turn must future-proof their assets to cater to these needs."

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