In 2023, the rapid expansion of Chinese e-commerce companies drove growth in the Greater Bay Area logistics real estate market. Cross-border e-commerce enterprises such as TEMU, SHEIN, Global AliExpress, and TikTok Shop are actively seeking warehouse space to support their rapidly growing e-commerce business. For example, prior to its successful participation in the Super Bowl, Pinduoduo's TEMU, based in Guangdong Province, had only a few warehouses, but now has more than 30.

According to data from Jones Lang LaSalle (JLL), the five cities in the Guangdong-Hong Kong-Macao Greater Bay Area, including Guangzhou, Shenzhen, Dongguan, Foshan, and Huizhou, accounted for a large proportion of warehouse leasing volume in 2023, recording a net absorption of 2.35 million square meters of warehouse space, accounting for 32% of the net absorption volume tracked in 24 cities in China. Net absorption, a key indicator of market performance, equals the occupied space minus the vacant space during a specific period.

Silvia Zeng, Director of JLL South China Research, stated that the logistics real estate market in the Greater Bay Area has "resisted" the headwinds of increased new supply. Currently, the vacancy rate in South China is only in single digits, while in other cities, it is in double digits.

According to data compiled by CBRE, in 2023, China's overall net absorption volume surged by 44% year-on-year to 7.22 million square meters, the second-highest level since the peak in 2021. Although the vacancy rate increased by 21.8% year-on-year, the added supply reached an unprecedented 12 million square meters.

Due to strong demand from e-commerce companies, logistics warehouses have become one of the most favored assets in commercial real estate categories for institutional investors such as Prologis China Holdings, ESR Group, and Gaw Capital Partners. Even in the face of headwinds, this sector is seen as a low-risk choice. For example, last month, ESR Group, one of the world's largest real estate asset managers, purchased a 126,000-square-meter plot of land in Guangzhou's Zengcheng District to develop a logistics supply chain center.

Silvia Zeng, Director of JLL South China Research, said, "Cross-border e-commerce platforms are leveraging the entire industrial chain advantage from production and procurement to export in the Greater Bay Area for global expansion. It can be seen that these platforms have all chosen the Greater Bay Area as their main cross-border network in China... This is closely related to our 'world factory' unique strategy and 'small batch, short cycle' model."

The concept of the "world factory" refers to the manufacturing cluster in the Greater Bay Area, where there are over 50,000 manufacturers, and it is adjacent to the Hong Kong Free Trade Zone, allowing for both rapid transportation and attractive labor costs. However, in turn, the order volume of these e-commerce companies has almost consumed all the new warehouse space in the Greater Bay Area.

According to CBRE, in terms of total merchandise value, TEMU, SHEIN, Global AliExpress, and TikTok Shop experienced the fastest growth in five years in 2023, with each company growing by at least $10 billion. In 2023, cross-border e-commerce companies also leased nearly 3.5 million square meters of new logistics warehouse space, a fivefold increase from 2022, and so far this year, cross-border e-commerce companies have pre-leased approximately 1.5 million square meters of warehouse space.

Deng Wei, Head of Advisory & Transaction Services | Industrial & Logistics, CBRE South China, said that demand in Foshan and Guangzhou is becoming increasingly active. For example, a major home appliance e-commerce giant leased a 137,000-square-meter warehouse in Guangzhou in the first quarter. (Although the company name was not disclosed, the media speculated it was TEMU). In addition, four out of five projects under development in Foshan have already been pre-leased.

The huge demand for warehouses stems from the launch of "fully managed" and "semi-managed" models by cross-border e-commerce platforms. The fully managed model, pioneered by TEMU, has since been adopted by other e-commerce platforms. Under the managed model, cross-border e-commerce platforms are responsible for pricing, warehousing, logistics, sales, and returns, among other aspects. Therefore, the fully managed model requires high-quality warehouses with sufficient space, not only for storage but also for parcel packaging and distribution.

At the same time, the "semi-managed" model allows sellers who own their own warehouses or have the experience and capabilities to deliver goods independently to manage and handle after-sales logistics, which also increases the demand for warehouse space for these sellers. For example, when Global AliExpress and Cainiao Logistics launched the semi-managed model in January, their inventory increased by 600% year-on-year.

Looking ahead, China's logistics and warehousing market will move towards a period of supply-demand balance. In 2024, the net absorption of logistics warehouses will reach approximately 7

来源：《Logistics property: Chinese cross-border e-commerce firms fuel demand, investment prospects in Greater Bay Area》