Jake's ViewIndustrial buildings rethink runs into home truths
Carrie Lam could have checked with developers first about conversion of 'vacant' properties to residential use, as the charade is fine by them
A proposal to convert industrial buildings into "transitional accommodation" is not a sound option to help people who are queuing for public housing, development officials have concluded.
Here is one of those does-not-compute equations that can leave you scratching your head. This one involves our stock of industrial property and bureaucrats who have been compelled by a legal decision to bury their heads in the sand.
The first chart shows you the long-term record of electricity use by industrial consumers. It is a good proxy for overall industrial production, and it says industrial activity is running at only about 44 per cent of the level of 20 years ago. Electricity sales have otherwise more than doubled over this period. Yet, as the second chart shows, prices of industrial property have risen almost tenfold over the last 10 years, far more than prices in the booming residential market. What is more, the vacancy rate of our 184 million square feet of industrial space has dropped to 5 per cent over this period, effectively full occupancy.
Just how does it happen that an industrial property market booms while industrial production crumbles?
It happens when industrial property is not used for industrial production alone but for all forms of commercial activity, including sales, back-office processing and even some residential conversions.