Goodman added another build-to-suit project to its China portfolio this week when the Australian real estate developer announced a deal for a 76,400 square metre facility in Nanjing, to be called Goodman Nanjing Airport Logistics Centre.
The developer announced the acquisition of a brownfield site in Nanjing’s Jiangning Economic and Technology Development Zone on October 27th, the same day that it made known that it had signed an agreement with third-party logistics provider Best Logistics develop the facility on Best’s behalf.
The agreement is the second of its kind between Goodman and Best, and calls for the developer to build two warehouses and a separate amenities centre on the site in eastern China’s Jiangsu province.
Competition for development sites, and warehouse space, has heated up in China during recent years, as growing retail consumption, particularly in the ecommerce sector, has driven demand for modern and more efficient logistics space.
A Second Build-to-Suit Partnership for Best and Goodman
The cooperation with Best is the second this year for Goodman and the latest in a series of wins in China’s logistics market.
In April, the two companies signed a similar deal for a 22,000 square metre build-to-suit warehouse facility in Goodman Chongqing Airport Logistics Park in western China. The Chongqing facility is still under construction.
Earlier this month Goodman inked a deal with IKEA to lease 11,000 square metres in Chengdu and in September the company leased 57,000 square metres to French sports retailer Decathlon. Earlier this year the Aussie developer tied up with Jack Ma’s Cainiao platform to lease 54,000 square metres.
Commenting on this latest deal between Best and Goodman, Philip Pearce, Managing Director Greater China for Goodman, said, “We are delighted to strengthen our partnership with Best Logistics with the signing of this agreement. This is a testament to the quality of our projects, our proven capability and our ability to provide the best warehousing solutions to customers to support their changing business needs.”
As part of the planned project, an existing structure on the site will be refurbished and expanded to approximately 52,000 square metres, while a new warehouse and amenity centre with a combined total of 24,000 square metres will be developed. The entire development of 76,400 square metres will be leased to Best Logistics for a term of 10 years.
Construction on the build-to-suit facility is scheduled to commence in November 2014, with an expected completion date of October 2015.
Demand for China Logistics Space Continues to Grow
Despite moves by major investors such as Blackstone, Fosun, Brookfield, Temasek and PGGM to pour money into China’s logistics real estate sector this year, the country still suffers from a lack of efficient warehouse facilities.
Goodman’s Pearce noted that, “We continue to see strong demand for prime logistics space in Eastern China, where there is a limited supply of industrial land.”
In a November 2013 research report, real estate consultancy JLL found that, China’s cities suffer from a chronic undersupply of modern warehouses, and the rise of B2C e-commerce has been a boon to developers, who know that these occupiers continued growth will guarantee demand for future warehouse assets.