Walmart adds warehouses to expand north China distribution
Greg Knowler, Senior Asia Editor | Jul 10, 2015 5:07AM EDT
HONG KONG — Walmart has opened four new warehouses in Tianjin to expand its distribution centre in northern China, the latest example of rising mainland demand for modern logistics property that is increasingly in short supply.
The global retailer held an opening ceremony this week for phase II of the Walmart Tianjin Distribution Centre in the Beichen Hi-Tech Industrial Park of Tianjin’s Binhai New Development Zone, a premises chosen by Walmart based on its strategic location with proximity to the regional seaport, road and rail network.
The four facilities total 860,800 square feet as Walmart moves ahead with plans to develop the distribution centre into its largest logistics park in northern China. Already having moved in are two of Walmart’s global supply chain partners Nestle and Unilever. Other international companies, such as ABB, are also planning to relocate to the logistics park, Walmart said in a statement.
“As an important part of Walmart China's long-term strategy, the development of supply chain is given high priority in the business. Walmart has been optimizing and improving its distribution network in China,” said Peter Sharp, head of Walmart Asia Realty.
The phase II development is managed by IDI Gazeley of Brookfield Logistics Properties, an investor and developer of logistics warehouses and distribution parks. As Walmart’s long-term strategic partner, IDI Gazeley has successfully delivered three major projects in China since 2007.
IDI Gazeley China country director, Sally Lin said there was a growing base of international companies in China requiring logistics facilities.
“We are also committed to growing our presence in the local market as well to serve the growing needs of our customers in China,” she said.
China’s growing domestic consumption across a wide variety of industries is driving demand for modern logistics facilities. However, the supply of land is the greatest challenge facing logistics property developers in China as they struggle to match supply of modern warehousing facilities to the demand being generated by a rapidly increasing consumer market.
The amount of money being poured into developing logistics facilities in China is largely to cope with huge increases in online shopping is incredible. E-commerce requires modern logistics facilities to facilitate and distribute the massive numbers of parcels being ordered online.
Market leader GLP expects China development completions of $1 billion in its 2015 financial year, while DHL has invested $272 million in China during the past two years. As the darling of the investment sector, the logistics property business is attracting investment is from the big developers backed by institutional funds, such as GLP, Goodman and ProLogis, but non-logistics groups were also becoming involved in the sector.
GLP estimates the market opportunity in China’s logistics property development sector to be in excess of $2.5 trillion by 2029 and its recent multi-billion dollar investment with a group of state owned companies and financial institutions was part of a plan to capitalize on the market opportunity. Over the last decade, GLP has built the largest logistics platform in China, valued at more than $8.2 billion.
Smaller rival Goodman currently has 8.4 million square feet of developments underway in key cities including Shanghai, Nanjing, Shenyang Tianjin, Chongqing, Langfang, Changzhou and Hefei, and an 8.6 million square feet development target for the next 12 months.
The global retailer held an opening ceremony this week for phase II of the Walmart Tianjin Distribution Centre in the Beichen Hi-Tech Industrial Park of Tianjin’s Binhai New Development Zone, a premises chosen by Walmart based on its strategic location with proximity to the regional seaport, road and rail network.
The four facilities total 860,800 square feet as Walmart moves ahead with plans to develop the distribution centre into its largest logistics park in northern China. Already having moved in are two of Walmart’s global supply chain partners Nestle and Unilever. Other international companies, such as ABB, are also planning to relocate to the logistics park, Walmart said in a statement.
“As an important part of Walmart China's long-term strategy, the development of supply chain is given high priority in the business. Walmart has been optimizing and improving its distribution network in China,” said Peter Sharp, head of Walmart Asia Realty.
The phase II development is managed by IDI Gazeley of Brookfield Logistics Properties, an investor and developer of logistics warehouses and distribution parks. As Walmart’s long-term strategic partner, IDI Gazeley has successfully delivered three major projects in China since 2007.
IDI Gazeley China country director, Sally Lin said there was a growing base of international companies in China requiring logistics facilities.
“We are also committed to growing our presence in the local market as well to serve the growing needs of our customers in China,” she said.
China’s growing domestic consumption across a wide variety of industries is driving demand for modern logistics facilities. However, the supply of land is the greatest challenge facing logistics property developers in China as they struggle to match supply of modern warehousing facilities to the demand being generated by a rapidly increasing consumer market.
The amount of money being poured into developing logistics facilities in China is largely to cope with huge increases in online shopping is incredible. E-commerce requires modern logistics facilities to facilitate and distribute the massive numbers of parcels being ordered online.
Market leader GLP expects China development completions of $1 billion in its 2015 financial year, while DHL has invested $272 million in China during the past two years. As the darling of the investment sector, the logistics property business is attracting investment is from the big developers backed by institutional funds, such as GLP, Goodman and ProLogis, but non-logistics groups were also becoming involved in the sector.
GLP estimates the market opportunity in China’s logistics property development sector to be in excess of $2.5 trillion by 2029 and its recent multi-billion dollar investment with a group of state owned companies and financial institutions was part of a plan to capitalize on the market opportunity. Over the last decade, GLP has built the largest logistics platform in China, valued at more than $8.2 billion.
Smaller rival Goodman currently has 8.4 million square feet of developments underway in key cities including Shanghai, Nanjing, Shenyang Tianjin, Chongqing, Langfang, Changzhou and Hefei, and an 8.6 million square feet development target for the next 12 months.
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