NEV Supply Chain Shifts Drive Chongqing's Warehouse Vacancy to Eight-Year Low | Insights

Chongqing - Jones Lang LaSalle (JLL) China recently reported a milestone in Chongqing's logistics real estate market, with Q3 2024 vacancy rates dropping 1.7 points to 18.4%—the lowest in eight years. This sixth consecutive quarterly decline highlights strong demand fueled by shifts in manufacturing and supply chains.

Liu Yang, general manager of JLL Chongqing, attributed this trend to the city's unique "33618" modern manufacturing cluster system. He noted, "Chongqing has seen groundbreaking investments in automobile, electronic information, clean energy, and other sectors, with key manufacturing investments reaching close to 70 billion yuan in the first three quarters." 

Changan Automobile held its Middle East and Africa brand launch event in Riyadh, Saudi Arabia. (Photo/Changan Automobile)

Highlighting the synergy among industries, Liu added, "As Chongqing deepens cooperation and promotes industrial transfers, the 'industry-technology-finance' integration will drive sustainable industrial development and stabilize the property market's fundamentals."

According to the Chongqing Commercial and Logistics Real Estate Report for Q3 2024 released by JLL China, warehouse demand has surged, particularly in the new energy vehicle (NEV) sector. Chongqing's NEV production saw a significant increase, reaching 525,000 units from January to August—up 1.5 times year-over-year and now accounting for 34.1% of the city’s total automobile production, a notable rise from 21.6% in 2023.

Two major NEV manufacturers, SERES and Changan Deepal, now represent 75.6% of the city's NEV production. These local companies are breaking away from traditional single-source supply chains by embracing a streamlined system that brings them into direct contact with a broader network of suppliers.

The factory of Great Wall Motor in Yongchang District, Chongqing. (Photo/Zheng Ran)

The industry is shifting to an order-based, just-in-time production model. Suppliers lease warehouses close to manufacturers for quicker response times, while vehicle manufacturers engage vendor inventory management (VMI) partners to streamline supply chains.

Moreover, the China-Singapore (Chongqing) Multimodal Transport Demonstration Base, located in Chongqing Liangjiang New Area, has also been instrumental in supporting logistics, generating over 150 million yuan in revenue from January to April this year, with more than 9,800 TEUs handled. 

With multimodal options integrating rail, water, and air routes, Chongqing is establishing itself as a globalized logistics hub. According to You Pengwei, head of logistics and industry at JLL West China, "The expansion of cross-border logistics will inject new energy into Chongqing's warehouse market, especially in the Airport Sub-market area."

In Chongqing's retail property sector, Savills reported no new projects launched in Q3 2024, maintaining the city’s quality retail property stock at 8.08 million square meters. Despite slower-than-expected consumption growth, demand remained strong in the outdoor sports and beauty sectors, accounting for over 47% of new leases, with brands like Wilson, KOLON SPORT, and TREK entering the market.

The North Part of Chongqing MixC shopping mall. (Photo/Niko Wu)

Zhu Jianhui, head of retail real estate and consumer research at JLL China, said, "The retail market is highly competitive. To stay relevant, high-quality project development should accelerate, while outdated properties should undergo upgrades. Retail spaces must innovate to meet consumers’ evolving needs, maintaining their market allure." 

Notably, prominent Chongqing commercial sites, such as Longfor Beicheng Paradise Walk and Chongqing Metropolitan Plaza, are leading this transformation and plan to enhance their competitiveness through improvements.