Goodman opened its 110,000 square metre facility in Shanghai last week
Fresh from opening a new 110,000 square metre warehouse facility in suburban Shanghai, the head of Goodman Group says the Australian industrial developer could add 63 percent to the size of its Greater China logistics portfolio.
Greg Goodman, whose warehouse and workshop builder already has more than 3.2 mlllion square metres of distribution facilities across China and Hong Kong, told the Australian media late last week that his firm has capacity available to build up to 2 million more square metres, as the mainland continues to develop a modern logistics network.
Goodman, with support from a major Canadian pension fund, is in a race to claim the number two spot among warehouse builders in China, while local players and rapidly growing startups such as e-Shang Redwood fight to fill demand driven by double-digit growth in e-commerce and chain retail.
New Goodman Facility Adds 110,000 Square Metres to Portfolio
“Our land bank will enable us to develop another two million square metres,” Goodman was quoted as saying in The Australian on Friday.
Greg Goodman is global CEO of the logistics developer
The company’s global CEO made his remarks immediately after the builder that bears his family name opened the three-storey Goodman Qingpu Centre on Wednesday, in Shanghai’s suburban Qingpu district.
According to a statement from Goodman, the facility was 97 percent leased upon completion.
Although common in densely populated areas such as Hong Kong and Japan, multi-storey logistics facilities had previously been a tough sell in China, where occupiers had been reluctant to shift away from the accessibility of single-storey space. However, rising demand and climbing rents, as well as more modern multi-storey designs, have made second and even third floor space more palatable to rapidly expanding retailers and third-party logistics providers desperate for distribution space close to mainland urban centres.
The Qingpu facility added more than three percent to Goodman’s existing mainland portfolio bringing its total Greater China distribution facilities to more than 3.2 million square metres across 41 sites, according to the developer. This logistics platform has been expanding rapidly thanks in part to a multi-billion dollar financial partnership between Goodman and the Canada Pension Plan Investment Board (CPPIB)
Pension Funds Fuelling Logistics Race
Expansions such as Goodman’s Qingpu Centre are catalysed by an influx of pension fund and private equity investment into China’s logistics sector.
Lured by strong investment yields and opportunities to serve a mainland ecommerce sector which grew by over 33 percent last year, Goodman and CPPIB committed another $1.5 billion into their existing china logistics joint venture last December.
That investment, 80 percent of which came from CPPIB, brought the joint venture’s total capitalisation to over $3.5 billion. Chinese retail websites sold RMB 3.9 trillion yuan ($590 billion) worth of goods in 2015 according to figures from the National Bureau of Statistics.
The December commitment by CPPIB came just one month after the Canadian fund announced a $500 million joint venture with Shanghai-based e-Shang and Dutch pension asset manager APG Asset Management to develop warehouse facilities in Korea.
E-Shang, which merged with competitor the Redwood Group to form E-Shang Redwood during January, said it January that it has 2.2 million square metres of warehouses spread across China, Japan and Korea, with another two million square metres said to be under development. The combined company is headed for a December IPO that could be valued at as much as $1 billion, according to market analysts.
E-Shang Redwood and Goodman are among a growing number of logistics developers that are capitalising on the same mainland-led wave that has helped market leader Global Logistics Properties build a 48 million square metre footprint spread across Asia and the Americas.
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