The property division of JD.com has acquired a warehouse facility occupied by the e-commerce giant in China’s Hubei province from Singapore-based SC Capital Partners and Japanese developer Unified Industrial, Mingtiandi has learned.
The 65,000 square metre (699,654 square foot) Wuhan Manufacturing & Logistics Park was sold for an undisclosed amount, according to a WeChat post made by Savills last week. Other market sources familiar with the transaction have identified JD Property as the buyer, with the purchase representing an expansion of the firm’s warehouse portfolio, said sources familiar with the deal.
“A well-known e-commerce technology industry group has reached a deal to sell the industrial and logistics park project located in the core area of Wuhan,” Savills said in its announcement. “After (the acquisition), the project will be further upgraded to a Grade A project in Central China.”
The warehouse is part of a logistics portfolio in mainland China originally owned by SC Capital, with the fund manager having sold four other assets in the set to the real estate investment unit of banking giant Morgan Stanley in May, also for an undisclosed sum.
Located in the city’s Jiangxia economic development zone, the Wuhan Manufacturing & Logistics Park benefits from its proximity to the 2021-completed Fourth Ring Road, a 148 kilometre (91 mile) expressway that passes through Wuhan’s 11th Yangtze River Bridge.
The warehouse is also 2.5 kilometres from the G4 and Fourth Ring Road interchange, according to Unified Industrial. This provides direct access to downtown Wuhan and Wuhan International Airport, which are 25 and 60 kilometres away, respectively.
Tokyo-based Unified Industrial completed its purchase of the land used for the project, along with an existing industrial facility in 2018, according to information on the developer’s website.
With SC Capital as a capital partner, the original owners developed build-to-suit facilities and a dormitory for Best Logistics, their tenant at the time, until the third-party logistics provider moved out in 2020 after the first COVID-19 lockdown in Wuhan, market sources told Mingtiandi.
The developers then secured Deppon Logistics as a new tenant, with JD Logistics, the freight division of JD.com, having agreed to buy a 66.5 percent stake in the company for RMB 8.97 billion (then $1.4 billion) in March of this year.
Warehouse demand has grown in Wuhan, with the net take-up of logistics space totalling 439,000 square metres in 2021, up 35.9 percent from the year before, although an excess of supply pushed the citywide vacancy rate up 6.2 percentage points from the previous year to 28.2 percent over the period, according to a Savills report published in April.
About 400,000 square metres of warehouse supply is set to be completed in Wuhan throughout 2022, which would push the total available stock to over 5 million square metres, said the property consultancy.
Despite the projected increase in supply, a combination of growing consumer demand for perishable items which require sophisticated logistics, ongoing growth in exports and the emergence of new e-commerce players like ByteDance are continuing to drive logistics demand on the mainland, said James Macdonald, head of research for Savills in China.
“The continuing expansion of manufacturing and consumer markets, albeit at a slower pace, is one of the key demand drivers of China’s logistics market,” he said, noting that the expansion had come despite a challenging first half of the year, with supply chain disruptions brought forth by lockdowns and dented consumer confidence.
JD.com has been expanding its mainland logistics empire over the last month, with its logistics unit having completed the purchase of more than a half-stake in the holding company that owns 66.5 percent of Deppon Logistics in late July. This marked the first tranche of its staggered acquisition arrangement, according to a filing with the Hong Kong stock exchange.
Also within the last month, JD Property completed its acquisition of warehouse developer China Logistics Property Holdings, according to a separate stock exchange filing.