In Asia's densely populated cities, multi-story warehouses are gaining traction.

Multi-story warehouses, or warehouses with more than one storey, are gaining traction in high-density regions across Asia, according to CBRE. Hunters

The most significant benefit, according to CBRE, is the significant increase in usable floor area per square foot of land. Higher usage rates are significant in land-scarce cities like Hong Kong, Singapore, South Korea, and Tokyo; as a result, they are more common in Asia than in other regions with more land available. CBRE anticipates a growing opportunity for multi-story warehouse investors, in line with the continuous interest in logistics assets.

Highlights of the multi-story warehouse market include:

Due to expensive land and building prices, tiny site areas, restricted industrial land availability, and the ability to serve city center populations, multi-story warehouses have thrived in Asia.

In land-scarce places, industrial land prices per developable area are roughly six times higher than in land-abundant areas. The most costly land is in Hong Kong, which costs $240 per square foot, followed by Singapore and Tokyo, which cost $90 and $70 per square foot, respectively. In tier-one cities, China has the cheapest land at $15 per square foot.

Due to heavily populated cities, site acreage for warehouse building are often smaller in Asia. According to the findings, warehouse height is inversely proportional to site size, meaning that the greater the warehouse height, the smaller the site area is. Hong Kong is a prime example of a land-scarce metropolis, with multi-story warehouses averaging 12 stories. In comparison, land in Australia and China has historically been huge and plentiful, resulting in warehouses that are only one to two floors tall. The average number of floors varies by region, ranging from 2 to 17 stories.

Strong e-commerce growth has fueled demand for multi-story warehouses, as commodities transportation inside cities becomes more crucial.

China and India are two of the fastest-growing markets for multi-story warehouse construction.

Dr. Henry Chin, CBRE Asia Pacific's Head of Research, tells World Property Journal, "E-rapid commerce's growth in Asia Pacific and around the world creates prospects for industrial and logistics companies. Consumers are increasingly buying items online, which is a game-changer for the sector, creating new demand for city logistics and fueling high demand for industrial sites closer to population centers. Large scale logistics facilities are typically placed outside of cities due to land availability; however, as online rivalry heats up, traditional and e-commerce businesses are pushing for speedier delivery of goods to consumers. In this day and age, where consumers are progressively demanding better service, warehousing and distribution facilities positioned closer to the consuming region might give better operational efficiency."

"Because retail rents in the region are substantially higher than prime logistics property, merchants can save money by substituting retail space with logistics space on industrial land. CBRE expects demand for city logistics hubs to rise as a result of the significant price difference and the rise in online shopping habits. To make the most efficient use of expensive land near highly populated regions, these logistics locations should be expanded into multi-story warehouses "Chin came to a conclusion.

CBRE Asia's Dennis Yeo, Managing Director, Advisory & Transactions Services - Industrial & Logistics, added, "Multi-story warehouses will continue to be built in locations where land is expensive and space is limited, such as Hong Kong, Singapore, South Korea, and Tokyo. In other expanding countries, such as China and India, fundamental demand drivers for multi-story warehouses are growing."

Yeo went on to say, "E-commerce is booming in India, with online sales expected to more than double between 2015 and 2020, thanks to favorable policy changes like the Goods and Services Tax (GST) reform, which is expected to spur large-scale adoption of distribution centers and increase efficiency in the domestic logistics market. Many shops will be vying for increased sales due to fierce e-commerce rivalry; the building of multi-story warehouses would be beneficial in serving the vast Indian population centers with faster delivery times."

"Given China's high market demand, the logistics sector remains a hotbed for investment. Because land in China has traditionally been large and plentiful, multi-story warehouses only average two floors. However, as local governments restrict land availability for logistics development due to the lack of tax revenues generated by such projects, logistics land supply is becoming more constrained. As a result, the demand for higher-story logistics facilities in tier-one cities may rise in the near future to make better use of existing land reserves ", Yeo said.