Savills has published its 2026 China Logistics Real Estate Report: Core Assets, Lasting Value. The report finds that China's logistics real estate market entered a tenant-led adjustment phase in 2025, with the sector shifting from rapid expansion towards the optimisation of existing assets and greater emphasis on operational quality.

Against a backdrop of changing supply and demand dynamics and increasing regional divergence, well-located Grade A logistics assets continue to demonstrate relatively resilient fundamentals. Logistics real estate has evolved beyond simply providing warehouse space to become an important component of modern supply chains, supported by long-term trends in consumption, manufacturing, international trade and government policy.

The report examines market dynamics across the following areas: macro and industrial fundamentals, supply and demand, regional performance, competition and operating models, investment trends, and the market outlook.

1. Macro & Industrial Fundamentals
China's economy maintained steady growth in 2025, with consumption, manufacturing and foreign trade continuing to underpin logistics demand. Rapid growth in instant retail reshaped warehouse networks, increasing demand for suburban facilities and shorter delivery chains. Advanced manufacturing continued to generate new warehousing demand, although many occupiers remained cautious about expansion. Growth in foreign trade and improvements in inland transport networks also supported demand in inland logistics hubs. Government policy continues to discourage lower-specification warehouse development while encouraging the renovation and upgrading of existing assets and higher-standard facilities. The continued expansion of logistics REITs is also helping to channel long-term capital towards high-quality assets.

2. Supply & Demand Landscape
Logistics land supply declined sharply, prompting developers to scale back new development activity and adopt a more disciplined approach to investment. Third-party logistics providers, e-commerce platforms and manufacturers remained the principal occupiers, with most focusing on lease renewals, network optimisation and cost control rather than expansion. Leading e-commerce platforms continued to expand their owner-operated logistics networks, reshaping demand for leased warehouse space. Regional divergence has become increasingly apparent. Core markets in South, Central and West China have generally demonstrated greater resilience, while East and North China continue to face elevated vacancy and rental pressure following several years of substantial new supply. Vacancy rates remain elevated by historical standards.

3. Regional Performance
•North China: Oversupply continues to weigh on market performance. Rents declined across the Beijing-Tianjin-Langfang market, with Langfang continuing to absorb demand spilling over from Beijing, while Qingdao and Shenyang remain largely driven by local industrial demand.

•East China: The market is showing early signs of stabilisation, with vacancy rates beginning to ease. Rents continued to decline in the major cities, although manufacturing-led markets have shown earlier signs of recovery. Rent concessions remain widely used to support occupancy.

•South China: A substantial pipeline of new supply has pushed vacancy rates higher. Supported by international trade and major port infrastructure, the region continues to offer attractive long-term fundamentals, with market activity increasingly concentrated among the leading operators.

•West China: Supply and demand remain relatively well balanced, with vacancy rates gradually declining. Chengdu and Chongqing continue to record comparatively stable market performance.

•Central China: Industrial relocation continues to support leasing demand, with major logistics hubs remaining attractive to occupiers and investors across Central and Western China.

4. Competition & Operation Model
The ten largest logistics developers now account for around 60% of the market, with market share continuing to consolidate among the industry's leading operators. At the same time, a structural imbalance has emerged, with an oversupply of conventional Grade A warehouse space alongside a shortage of more specialised, higher-specification facilities. This has led many developers to postpone new projects while reassessing development strategies.

The market is placing greater emphasis on long-term asset management alongside development. Landlords are increasingly offering more flexible lease structures and longer rent-free periods to improve occupancy. Smaller developers continue to face increasing competitive and financial pressure, contributing to further industry consolidation.

5. Capital Trends & Outlook
The logistics real estate market appears to be approaching the lower end of its current cycle. Insurance companies, state-owned investors and institutional capital continue to favour high-quality assets in core markets, while interest in cold chain and smart logistics facilities is gradually increasing. Logistics REITs have generally delivered relatively stable performance, supported by resilient cash flows despite continued pressure on rents. Looking ahead, new supply is expected to continue moderating in 2026. Rental declines are likely to ease, with the highest-quality assets expected to stabilise ahead of the broader market, accompanied by a gradual improvement in occupancy. Over the longer term, competition is expected to be driven increasingly by asset quality rather than scale, with asset refurbishment, technological upgrades and sustainable asset management playing an increasingly important role in supporting long-term value.