The gradual recovery of global supply chains has further boosted 3PL businesses, but with less inventory on hand vacancy has risen temporarily.

• With the recovery in global supply chains 3PLs and other logistics operators saw a strong pick up in business, leading to higher inventory turnover and more demand for modern logistics premises rather than simple storage spaces.
• While there were some major renewals / expansions in the warehouse leasing market, the reviving logistics market also meant inventory previously stuck in warehouses (mainly traditional ones) was finally shipped, causing overall warehouse vacancy to increase temporarily.
• Investment sentiment continued to thrive in Q2 with major deals over HK$100 million concluded worth a total of over HK$6 billion.  The reviving logistics prospects attracted investment funds to chase warehouse assets given the stable yields on offer.
• With logistics prospects looking set to improve further, most warehouse landlords will act fast to raise rents, which may slow leasing transactions in the coming months even for modern warehouses.  Traditional warehouses, which have benefited from broken supply chains with stockpiled inventory over the past few months, may face further upward pressure of vacancy. 
• Investment sentiment has been robust for both industrial and warehouse assets in 1H/2021, with reasonably priced stock quickly snapped up.  While abundant capital is still likely to be available, it will find it is chasing a diminishing pool of stock, no matter for investment or redevelopment, and prices are therefore likely to increase further.