Hong Kong Logistics Sector Enters a New Era as Demand for Modern, High Spec Warehouses Surges: CBRE

Hong Kong is transforming into a sustainable international smart logistics hub, driven by strong growth in cross boundary e commerce, high value goods handling, and demand for advanced value added logistics services, as CBRE reveals in the latest research report. Logistics operators are prioritising high spec facilities featuring automation, higher ceilings, energy efficient systems and enhanced amenities to stay competitive in a fast moving market.

“Sustained growth in cross boundary e commerce and high value goods such as electronics, commodities, pharmaceuticals and art will create substantial opportunities for Hong Kong’s logistics industry. Although e commerce penetration rose to 9.4% in 2025 in Hong Kong, it remains far below global and mainland levels, signalling strong room for expansion. As online retail sales continue to grow, on a straight-line projection, we expect warehouse space occupied by e commerce operators in Hong Kong to triple by 2035, However, the demand might change as technology advancement improves warehouse efficiency,” said Marcos Chan, Executive Director, Head of Research, CBRE Hong Kong.

Strong Upgrade Demand as Quality Gap Widens

Against this backdrop, modern logistics real estate is increasingly focused on value added services, automation and sustainability, and occupiers seek institutional grade facilities with advanced specifications to enhance operational efficiency and support the adoption of new logistics technologies.

However, many of Hong Kong’s logistics facilities are aged buildings with obsolete specifications, with the majority featuring small floor plates and low ceiling heights. Over half of the city’s purpose-built warehouses were built more than 30 years ago, 10% over 40 years of age, creating a significant quality gap that restricts the adoption of modern logistics technology. 

“Upgrading demand is accelerating as logistics operators seek facilities that can support modern, technology driven operations. Occupiers now prioritise buildings with direct vehicular access, larger floor plates, high ceilings and reliable power to accommodate automation and high floor loading for heavy duty equipment. Supporting amenities, from parking and fleet management to EV charging and smart security, are increasingly essential. With many firms still operating in aged non-warehouse industrial buildings, we estimate that upgrading demand from these occupiers alone could reach up to 52 million sq. ft. over the long term,” says Samuel Lai, Executive Director, Head of Industrial & Logistics, CBRE Hong Kong.

Modern Logistics Cluster in Kwai Tsing

Kwai Tsing has emerged as the city’s most advanced logistics district, benefitting from the completion of 8.4 million sq. ft. of prime warehouse supply between 2010 and 2025, accounting for 60% of Hong Kong’s warehouse pipeline during the period. The addition of these new buildings, representing 34% of total warehouse stock by GFA in Kwai Tsing, has revitalised the district.

The strategic location makes Kwai Tsing the preferred location for high-value good logistics operators, e-commerce companies and freight forwarders. Between 2023 and 2025, the electronics sector alone leased 415,700 sq. ft. in the district, accounting for 69% of citywide leasing volume by the sector, while e-commerce companies leased around 347,800 sq. ft., representing 40% of overall leasing volume contributed by the sector. Upcoming large-scale developments, including a combined 6.7 million sq. ft. GFA of modern logistics projects scheduled for completion by 2028, will further reinforce its dominance. 

At the same time, the Northern Metropolis will provide a once-in-a-generation opportunity to reshape Hong Kong’s logistics infrastructure. With a maximum of 74 million sq. ft. GFA of planned industrial and logistics space, it is poised to become the city’s next major growth engine, enabling the development of diverse modern logistics facilities. This will support the relocation of brownfield operations while meeting future demand for high value, technology enabled logistics services.

Shift Toward 3D Rental Pricing to Reflect True Storage Capacity

Modern logistics operations increasingly rely on automation systems requiring higher vertical clearance. The traditional practice of quoting rents on a per-square-foot basis no longer reflects true capacity. When assessed using a 3D per cubic metre (CBM) rental model, modern high ceiling logistics facilities often prove more cost efficient despite seemingly higher 2D unit rents. CBRE expects 3D unit rent calculations to become increasingly mainstream as logistics operators scale up automation and value added services.

Hong Kong’s logistics sector is at a pivotal moment. Sustained growth in high value goods, cross boundary e-commerce and advanced logistics services is accelerating the need for modern facilities. Kwai Tsing will continue leading in the near term, while the Northern Metropolis will unlock new long-term development potential. 

To fully capture these opportunities, CBRE recommends that the government adopt a flexible and forward looking approach to transforming logistics real estate. This includes excluding ramp areas from land cost calculations, relaxing the double counting rule for high ceiling space, and allowing low density logistics developments in new growth areas, which are in line with global prime warehouse standards. CBRE also advises a phased development approach in the Northern Metropolis to ensure market stability while supporting brownfield relocations and encouraging the construction of diversified, modern logistics facilities that meet the needs of different occupier types.

Together, these will help Hong Kong strengthen its position as a sustainable international smart logistics hub and support the creation of a modern, technologically advanced logistics ecosystem for the future.