Guangzhou commercial space sales affected by e-commerce

The booming development of e-commerce posed great challenges to sales and rentals of retail properties in Guangzhou, the capital of Guangdong province, but helped boost demand for local unbonded warehouses last year, an industrial report revealed.

Net absorption of retail properties in the city decreased by 20,000 square meters from 2012 to about 250,000 square meters in 2013, according to a report by Jones Lang LaSalle Inc, a global real estate services and investment management company.

"Demand for retail properties downsized because of a strong performance by e-commerce last year," said Sun Yanmei, associate director of Retail for Jones Lang LaSalle in Guangzhou.

Retailers have adopted a cautious approach to opening new stores as people have started purchasing goods through online shopping, according to the report.

"The vacancy rate of retail properties was relatively high last year as retailers reduced demand for business expansion. It took a long time for new properties to attract users," Sun said.

The vacancy rate of retail properties in Guangzhou reached about 4.3 percent last year, an increase of 1.2 percentage points from 2012, according to the report.

China's online shopping is expected to account for 7.8 percent of the nation's total retail sales of consumer goods in 2013, according to Yixun.com, the e-commerce unit of Tencent Holdings Ltd, China's largest Internet company.

"Rentals and sales for retail properties will continue to decline in 2014 because e-commerce will continue to nibble at the market share of traditional retailers," Sun said.

However, the booming development of e-commerce helped stimulate sales and rentals of unbonded warehouses, with rental prices of warehouses in Guangzhou increasing sharply in 2013, according to the report.

A growing number of e-commerce providers including Yixun.com, Suning Appliance Co Ltd and Amazon.com.cn developed increasing demand for warehouses in 2013, according to Zhang Ning, head of Industrial for Jones Lang LaSalle Inc in Guangzhou.

Following a strong performance by e-commerce, the rental price of unbonded warehouses in Guangzhou increased by 4.6 percent year-on-year in 2013, 1.5 percentage points higher than 2012, according to the report.

In 2013, the city had about 340,000 square meters of new warehouses, making the total storage area 1.69 million square meters, the report said.

"Rentals and sales for warehouse of high quality will continue to increase in the years ahead because a growing number of small and medium-sized online shopping companies have also developed strong demand," Zhang said.

About 500,000 square meters of new unbonded warehouses in Guangzhou are expected to be put into use by the end of 2014, according to the report.

"Many e-commerce providers have chosen Guangzhou, a traditional commerce and trade city, as their regional distribution center in South China so there is a huge potential for warehouse development," Zhang said.

Yixun.com, Suning and Amazon all announced plans last year to build their logistics centers at the Huangpu Development Zone in Guangzhou, which will help increase distribution efficiency, according to Zhang.