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SCMP Reporter

HONGKONG's huge appetite for quality warehouse space is likely to lead to a shortage at the end of 1993 putting pressure on rentals, says Asia Terminals managing director David Allen.

  He said if the take-up rate of two million square feet a year of new, quality warehouse space over the past two years continued, this trend would certainly lead to a shortage.

  ''We haven't seen any major new development to meet this rising demand,'' Mr Allen said, adding that the vast majority of quality warehouse space already had been taken up.

  ''The future is still uncertain both in the medium and long term,'' he said.

  Despite a 20 per cent rise in rentals of quality warehouse space in Kwai Chung, it was still cheaper than rates in the Kowloon Bay area, he claimed.

  Some businessmen, who had warehouse space in the Kowloon Bay area, were now looking for good space in Kwai Chung due to the lower rentals, he said.

  Rentals of quality space at Kwai Chung was $11 a sq ft compared with Kowloon Bay's rentals of between $13 and $15 a sq ft.

  Hongkong port's container throughput statistics for the first 11 months of last year, which rose by 28.5 per cent to 7.23 million twenty-foot equivalent units (TEUs), has been an indicator of the huge pressure on warehouse facilities in the territory.

  The massive ATL building, is still under construction and scheduled to be fully completed in mid-1994, was continuing to put out some space in the market in the short term, Mr Allen said.

  ATL, which had taken delivery of the third-phase construction of the east wing and up to the ninth floor of the fifth phase, expects to get the 10th and 11th floors delivered before the end of the month.

  As pressure increased on new quality warehouse space, there was also some evidence of movement into China as the rates were lower across the border, Mr Allen said.

  According to the Guinness Book of Records, the six million sq ft of leasable space offered by ATL - the record for the world's biggest building, is equivalent to the space available in 10 Hongkong Convention and Exhibition Centres.

  ATL's short-term business leases, covering a one-year period, and the long-term business leases, covering three year periods, each take up 20 per cent of total business, with the remaining 60 per cent tied up in to three years agreements.

  Mr Allen explained that ATL's key activity of cargo handling, storage and distribution was handled separately.

  ATL presently has a 90 per cent occupancy rate - a low figure compared with the 96 per cent average for last year.

  Mr Allen said ATL, which recorded a 30 per cent growth of revenue in 1992 over 1991, was forecasting an equal percentage growth this year.

  ATL, which has the world's biggest container freight station and distribution centre, said the company would maintain its market share and would increase its rentals by minimal levels.

    The company also had a major quality programme which had been introduced about five years ago to eliminate unnecessary costs.

  Mr Allen said ATL concentrated on continuing staff-training programmes to replace departing personnel.

  This programme ensured continuity of operational ability and ensured mistakes in cargo handling did not impact on productivity.

  Hongkong port, he said, was looking forward to a 20 per cent growth this year.



Warehouse needs tipped to lift rents