Ti’s warehouse tracker: cost growth quickens in some markets

By Ti Insight

Ti has formulated its warehouse cost index, which features in its latest edition of the Warehouse Tracker Q2 2024. The index looks to track overall warehousing costs in North America, Europe, and North-East Asia, and utilises inputs from warehousing rent, labour, and energy costs to determine the current state of overall warehousing costs, as well as estimate the future direction of costs.

Cost Index – Major Regions

Costs have generally been rising since Q1 2022. Warehouse costs grew the quickest year-on- year in North-East Asia, driven by growth in Japan. This was followed by North America, which saw costs grow by 4% y-o-y. Europe saw the slowest year-on-year growth of 1.3% as demand continues to wane and inflation comes under control.

Both North America and North-East Asia saw quicker y-o-y growth in Q2 2024 in comparison to Q1 2024. Higher costs in North America have been driven predominantly by an increase in rents in the US due to constrained supply in certain core markets. As such, it is important to note that although y-o-y cost growth in Western economies is slower in Q2 2024 than in previous quarters, vacancy is still tight in comparison with historic norms in many markets and as such costs remain elevated.

Looking forward, we would therefore expect minimal cost movement in Europe. Based on its current trajectory, we would expect costs in North America to continue climbing over the next year, although at a much slower pace than in previous years. From late 2024 and into 2025 however, we’d expect costs to push upward in both Europe and North America at a quicker pace once more, as reduced warehouse completions push down on vacancy rates and demand recovers.

Despite an uptick in cost growth in Q2 2024, we would expect costs in North-East Asia to remain mostly flat or see minimal upward change as an abundance of supply leaves little room for cost and rent growth.

Other report highlights include:

• Vacancy rates continue to rise globally.
• Global trade and demand are recovering, led by Europe and North America, while China lags due to weak consumption.
• 4% of respondents to Ti’s confidence index expect warehouse costs to increase in 3 months’ time in comparison with the same period last year.
• North America saw its quickest q-o-q cost growth since Q2 2022

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