GLP, CPE, Savills Upbeat on Solving China Shed Supply Overhang: MTD TV

Steady e-commerce growth and sustained demand from manufacturing and consumption will chip away at the current overhang of China warehouse supply, according to speakers from GLP, CPE and Savills at Mingtiandi’s 2025 APAC Logistics Forum on Thursday. Watch the full recording>> 

While excess supply helped drive average warehouse vacancy in China to 19.8 percent by the end of 2024, the mismatch is likely temporary, the guests told MTD TV viewers during the forum, which is sponsored by Yardi. China’s online retail sales eked out 0.6 percent growth last year after a 12 percent spike in 2023, per official statistics, and absorption of new supply is expected to bring vacancy down to an average of 16 percent in 2027, CBRE said in a recent report.

With new supply in the market levelling off, GLP’s Tim Wang expects investment opportunities as e-commerce, express deliveries and cold chain users continue to generate demand.

“You’re entering a space where you find less supply coming online, and for investors, I think, because of less supply and the more mature market, it is relatively easy for you to underwrite a new investment,” said Wang, co-president of logistics and industrial real estate for China at the developer and fund manager. “So my view is the uncertainty is going to be less and less despite geopolitical trade tensions.”

Limited Trade War Impact

Looking at potential effects of the trade war with the US, Wang noted that domestic consumption accounts for 40 to 50 percent of China’s GDP growth, with exports making up 20 to 30 percent. The breakdown is even starker in GLP China’s portfolio, with less than 10 percent related to exports and a mere 2 percent servicing US-bound shipments.

“So the trade war has a certain impact,” said Wang, a former head of China real estate at Blackstone. “And some people are wondering what’s going to happen next, but overall, because of the 2 percent, I think the impact is limited.”

Given the reliable nature of warehouse supply forecasts, CPE managing director Johnny Shao said his private equity firm seeks to invest based on demand-side considerations like large population catchments, a solid consumption base and a diversified industrial mix.

“For eastern China, we see some markets actually performing better and the rents are starting to hit the bottom and we see some of the areas there will have no new supply from 2027 to 2028,” Shao said. “So I think we are still trying to do more, to understand each market very carefully.”

Savills China research head James Macdonald agreed that the trade war hasn’t had much effect on the non-bonded warehouse space, though he cautioned of a possible “second-order impact” if the challenging economic situation makes domestic consumers less likely to spend.

“These markets respond a lot faster to challenging market conditions than, say, the commercial markets, the office, the retail markets, where from acquisition of land to completion of assets takes seven, eight years,” Macdonald said. “In the warehouse space, it’s maybe two years. And so the slamming on the brakes in terms of new supply means that you could see a correction or stability within the market happening a little bit faster.”

Emerging Markets Ahead

The APAC Logistics Forum continues on Tuesday 24 June with a panel on investment opportunities in the region’s emerging markets.

The MTD TV programme will feature insights from Priyank Shah, head of fund management at Logicap and Rava Partners; Paul Lee, CEO and managing partner at Northmod; and Ajay Sharma, managing director for valuation services at Colliers India.

The three guests will discuss how rising tariffs and ongoing trade tensions are accelerating supply chain diversification and fuelling demand for modern logistics infrastructure in Southeast Asia, as India enjoys a warehouse leasing boom across several major cities.

After the interview portion, Mingtiandi’s team will moderate a live Q&A session in which viewers can quiz the speakers on their market outlooks and get direct insights from some of the region’s top experts in the logistics space.