Posts Tagged ‘warehouse’

Cost multiplying for industrial market due to floods

November 20, 2011

The ongoing floods that have affected more than 59 provinces in Thailand have devastated huge swathes of agricultural land but the extremity of the floods have put more damaged industrial activity, including industrial estates and further potential flooding threatens more central locations causing greater disruptions to the supply chain, according to Colliers International Thailand.
While the floods have ravaged many parts of Thailand since August, relatively little damage to manufacturing was inflicted due to most factories being located away from initial flooding areas. However this changed on October 5th when water levels reached their highest point in living memory and Ayutthaya, home to significant manufacturing, was seriously affected. According to Narumon Rodsiravoraphat, Senior Manager for Industrial Services at Colliers, far greater damage was caused to industry in the last few days compared to the previous few months. “Over a hundred times greater financial loss to industry was incurred since 5th October due to severe damage to two industrial estates and two others have been evacuated in anticipation of flood waters reaching them”, said Narumon.

Many warehouses and distribution centres have been seriously affected especially in Ayutthaya area and along the main highway of Phahonyothin road which has become effectively the channel for water in the north to flow down to the central provinces. Over the course of the week further flooding is expected due to looming storms and industrial facilities in Pathumthani and Bangkok itself are now in danger.

According to Narumon, more than 500 factories have been forced to close during this situation and more than 100,000 workers have been affected from this crisis. “The damage from the flooding may be take up to two to three months to be accessed and rectified after the water level decreases as companies must take time for renovation of facilities as well as repair and re-operation of machinery”, she added.
The industrial market has picked up rapidly from 2010 and there has already been a shortage of warehouse space in some locations, especially good quality large space in Ayutthaya and some Bangna areas. Lamchabang, where there is strong demand for free zones, also seems short of supply. “Developers should understand more of the market demands and requirements in terms of specification, locations, layout, and general/free trade zones, etc. And we do hope that all new warehouse developments will all be raised floor”, said Narumon.
Although the initial reaction after the flood will be for the relocation of manufacturing, in reality manufacturers will remain rather sanguine according to Patima Jeerapaet, Managing Director of Colliers. “Many have invested significant amounts of money over time and they are just not going to walk away”, he said. “It also takes time to create a supplier network as well” he added. Patima also noted that serious damage was not limited to Thailand and the horrors of the flood are also evident in Cambodia, Philippines and Laos. “Manufacturers will be wary of relocating to countries with less reliable infrastructure to cope with floods and they may decide that Thailand is a better location than say Vietnam or Cambodia due to this fact. However new investment for manufacturing locations may be shifted towards non flooding areas in Thailand. All factories, distribution centers, and logistics companies also must create and work out their contingency plan well enough in advance”, said Patima.

One possible ramification could be the development of back up storage centres in locations upon higher ground that can protect goods from damage. “After the riots in 2010 many office occupiers considered back up locations and the same may now apply for industrial activity”, said Patima. However, unfortunately the flooding story has not run its course and a better assessment can be made in a week or so time. “We only hope that further damage is kept to a minimum”‘ added Patima.

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Tokyo Records Highest Warehouse Rentals Globally In 2010

May 2, 2011

Asia Pacific warehouse demand is expected to take a dip due to the impact on the regional trade after the March 11 earthquake and tsunami in Japan

May 2, 2011, Bangkok – Colliers International recently released the Global Industrial Highlights – Second Half 2010, with Asia Pacific emerging yet again as the most robust region, North America registering a pick-up in leasing activity while Europe, Middle East and Africa (EMEA) reported a modest growth.

In terms of warehouse rental, Tokyo topped the world at USD 22.56 as of end 2010. This is followed by London – Heathrow, Zurich, Hong Kong and Geneva – the global top five industrial warehouse rentals.

Asia Pacific
In the second half of 2010, exports in many countries posted encouraging growth rates, with healthy economic growth in the region and exporters boosting sales both within the region and globally.  Asia Pacific continued to be the world’s most robust region.  Across most markets in Asia Pacific, warehouse rentals were steady or in upward swing.  Tokyo’s warehouse rentals were the highest at the end of 2010, followed by Hong Kong and Singapore at the 4th and 7th spot respectively.

Thailand witnessed a continued surge in industrial estate activity over the course of 2010 with an additional supply of 8,914 rai (3,523 acres) of Serviced Industrial Land Plots being added to the market.

However, with Japan’s devastating earthquake on March 2011, trade across the region will feel some effects with demand for warehouse space in the region expected to be sluggish compared to 2010. Disruptions in the supply chain have been felt in Thailand, a strong manufacturing base for Japanese companies. However over the medium and long term Thailand is expected to benefit as Japanese multinationals consider moving more production away from its own shores.

North America
Both the United States and Canadian warehouse market registered a noticeable pick-up in the second half of 2010.  Warehouse demand in the United States was concentrated in a number of port-related markets, while in Canada, most markets recorded a fairly brisk period in the second half of 2010.  Meanwhile, with a return of demand and continued drop-off in construction, vacancies in Canada and the United States decreased.

Amid signs of economic recovery in both countries, occupancy gains are expected to be sizeable in 2011 given healthy gains in manufacturing and a continued bounce-back in consumer spending.  However, rentals are expected to remain largely directionless this year.  Taking the second half of 2010 as an example, rental in United States fell 2.9% while those in Canada increased marginally by 0.2%.

EMEA
In EMEA, various markets were characterised by sluggish leasing activity and little expansion.  Warehouse rentals again kept steady in the second half of 2010, similar to the first six months in the year, although Europe is home to some of the most expensive warehouse rentals in the world.  For example, London – Heathrow, Zurich and Geneva were included in the top five most expensive warehouse rentals in the world.

London – Heathrow not only registered the most expensive warehouse rentals in EMEA, its prime industrial land prices at USD 56.82 per sq ft was the highest in the region and remained far in excess of any other markets in EMEA.