Demand for ready-built factories and warehouses increasing: CBRE

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HCM CITY - The development of e-commerce together with delays to import and export activities due to disrupted logistics services has accelerated demand for ready-built factories and warehouses during the COVID-19 outbreak in Việt Nam.

In contrast, the number of leasing inquiries for other industrial properties has fallen due to travel bans and social distancing.

"After the pandemic is contained, the average asking rent for warehouses will increase by 4-11 per cent y-o-y," Phạm Ngọc Thiên Thanh, associate director at CBRE Research & Consulting, said at an online conference on ready-built factory development on Thursday in HCM City.

Over the last two years, Việt Nam's ready-built factory and warehouse market had grown with strong supply and stable performance, according to CBRE Việt Nam Ltd, Co.

"It is expected that by the end of 2020, the total supply of ready-built factory and warehouses in the North will reach 2 million sq.m, up 25.3 per cent y-o-y. Ready-built factories in the South will reach 2.7 million sq.m, up 28.2 per cent y-o-y," Thanh said.

"Việt Nam's ready-built factory and warehouse market is expected to continue to gather momentum in the coming years. Demand for warehouses has been mainly driven by e-commerce companies who are expanding their storage space and distribution networks," said Lê Trọng Hiếu, director of CBRE Industrial Leasing Services. "In addition, more investors/developers are actively seeking sites to develop logistics facilities."

Niche industrial and logistic assets will also benefit in the long term, with growing consumption and distribution of groceries and fresh foods set to accelerate occupier demand for temperature-controlled storage (cold or cool storage warehouses), according to Hiếu.

In the context of limited industrial land supply, high-rise warehouses had been introduced to create bigger storage space for the needs of e-commerce companies.

The pandemic had added impetus on manufacturers and governments to plan to reduce supply chain dependency on China (and potentially any other single market). This would form part of the overarching theme of a move away from centralised supply and towards greater diversification – a trend likely to benefit Vietnam, according to CBRE Việt Nam.

During this difficult period, developers of industrial parks and ready-built factories have offered support policies, including reductions of rents and infrastructure maintenance fees (from 10 per cent to 30 per cent), restructuring payment terms and exempting rent for new businesses setting up factories during the outbreak.

It is time for a critical makeover of Việt Nam's industrial property market. Ready-built warehouses and factories are evolving quickly to take advantage of this golden opportunity. Robust demand for ready-built factories include new factory set-ups and expansion. More recently, developers have been constructing ready-built factories and warehouses to maximise the efficiency of land use and cater to the full spectrum of demand.

The modern generation of ready-built factories, so-called "Ready-built factory 4.0", integrated 4.0 technologies to bring more convenience to occupiers in the process of leasing, manufacturing and operating, and was emerging as a new trend, according to CBRE Việt Nam. Ready-built factories 4.0 apply virtual reality technology to bring factory spaces to clients at any time and anywhere. - VNS