Australian industrial developer Goodman scored some points in China’s increasingly competitive logistics market last week when it signed two new agreements to lease 57,000 square metres of warehouse space to Decathlon.
China’s once sleepy warehouse real estate sector has grown white-hot in recent years as demand for distribution space to support the country’s retail sector has helped logistics projects generate investment yields averaging around nine percent.
The two leases followed up on previous cooperation between Goodman and the French sporting goods retailer and involved two separate units of logistics space at the developer’s Goodman Citylink development in Hebei Province, China.
Logistics Space Becoming More Valuable
Despite the difficulties in sourcing land for new projects, the logistics sector has grown increasingly attractive as China’s other real estate sectors have slowed down. During the last year, investment giants such as Blackstone, Fosun, Brookfield, Temasek and PGGM have signed agreements to put billions of dollars in new investment into developing new warehouse projects.
Highlighting the importance of the market to Goodman, Philip Pearce, the company’s Managing Director for Greater China commented, “China is a very important market for Goodman, highlighted by the growing demand for prime logistics space, which has now extended to second and third tier cities across the mainland. We continue to invest a substantial amount of capital annually to expand our footprint in this region and to capitalise on that growth.”
Goodman’s Hebei Project Now Leased Out
Goodman Citylink is located in Yanjiao Economic and Technological Development Zone, in the city of Langfang in Hebei Province. The project has a total gross floor area of 130,000 sqm and on completion, will have a market value in excess of US$100 million. The distribution centre is located near Beijing’s sixth ring road giving it access to one of China’s largest cities.
According to a statement from Goodman, Decathlon which has developed a network of stores selling sports apparel and equipment in China, plans to use the new logistics space to enhance its distribution capability in Northern China.
With the signing of this latest lease, Goodman Citylink has reached full occupancy according to the developer. In addition to Decathlon, occupiers at the facility include BMW Brilliance Automotive, which last year signed an agreement to develop a 33,300 sqm built-to-suit facility at Goodman Citylink for its regional distribution centre for car auto parts in Northern China. BMW Brilliance also recently leased an additional 12,275 sqm at the development.
Goodman currently has 786,580 sqm of developments underway in key cities including Shanghai, Nanjing, Shenyang Tianjin, Chongqing, Langfang, Changzhou and Hefei, and an 800,000 sqm development target for the next 12 months, according to the company.