The trend of multifunctional warehouses is increasing

Vietnam is becoming a destination for many international manufacturers. Most medium-sized and small-sized manufacturers choose to rent ready-built warehouses instead of building new ones, in order to shorten the time and reduce initial investment costs.

Diverse needs

JLL Vietnam's report shows that the demand for renting high-rise warehouse space with an area of ​​1,000 - 5,000 m2 is increasing rapidly. Businesses with this demand mainly operate in the light industry.

Currently, the positive net absorption rate of the ready-built warehouse segment is due to the increase in domestic demand. This helps the net absorption in the South reach approximately 16,000 m2 in Q2/2024, nearly 03 times higher than the previous quarter.

In the North, the warehouse leasing momentum from manufacturing groups is increasingly dominant thanks to the manufacturing sector being invested in and developed in the context of the “China +1” shift. Therefore, net absorption reached 27,000 m2 in Q2/2024. Led by Bac Ninh and Hai Phong provinces.

In the southern region, following the launch of the Cainiao Dong Nai Logistics Park project last quarter, SLP introduced phase 2 of the SLP Park Long Hau project (Long An province), adding more than 27,000 m2 of new leasable area. Therefore, the size of the southern and northern logistics market in 2024 will increase by about 1.6 times compared to 2023.

Cushman Wakefield Vietnam's research also shows that demand for ready-built factories is recovering thanks to increased domestic consumption and new FDI inflows into Vietnam. Demand comes from a variety of industries, from traditional industries such as plastics, vehicle manufacturing and animal feed to high value-added industries such as electronics and pharmaceuticals.

According to CBRE Vietnam, in the South, there will be no new supply of ready-built warehouses in the first 6 months of 2024. The occupancy rate reached 63% thanks to large transactions recorded at projects in Ho Chi Minh City and Long An.

In contrast, the ready-built factory market has been vibrant as large-scale projects with a total area of ​​over 371,000 m2 in Binh Duong and Dong Nai have come into operation. The occupancy rate reached 81%.

Warehouse and ready-built factory rental prices in the Southern market remained stable compared to the previous quarter, reaching 4.5 and 4.9 USD/m2/month, respectively, up 2% year-on-year for warehouses and 1% for factories. Demand for ready-built warehouses in the South comes from manufacturers in the high-tech and renewable energy sectors, in addition to the expansion of companies in the e-commerce sector.

In the North, in the first half of 2024, more than 225,000 m2 of ready-built warehouses were completed in tier 1 markets, of which the area of ​​ready-built factories accounted for 95%. The absorption area of ​​ready-built factories was also outstanding and more than 4 times higher than the absorption area of ​​ready-built warehouses. The occupancy rate of ready-built factories reached 89%, while warehouses in the North maintained an occupancy rate of 79%.

The rental price of ready-built factories reached USD 4.9/m2/month, up 1.9% YoY and ready-built warehouses reached USD 4.6/m2/month, down 1% YoY. The electronics, semiconductor, furniture, and logistics industries were the leading tenants of ready-built warehouses/factories in the North in the first half of this year.

Increased supply

According to many businesses, since the end of the second quarter of 2024, the modern ready-built warehouse market in the South has shown promising initial signs from newly received rental requests. The reason is that import-export activities have shown signs of recovery, although the improvement is still modest.

Cushman & Wakefield estimates that the ready-built factory and warehouse market will also have additional future supply of 1.4 million square meters and 1.9 million square meters, respectively, in the next 3 years, of which 55% of the future supply will be located in Dong Nai province, where Long Thanh airport is located.

According to CBRE Vietnam, in the next 3 years, rental prices of ready-built warehouses/factories are forecast to increase slightly, from 1-4%/year, with the ready-built factory segment having a higher price increase rate in the next 3 years.

JLL Vietnam forecasts that the Southern ready-built warehouse market will have about 100,000 m2 of new facilities completed in the second half of 2024. The North is expected to record a significant amount of new supply with about 131,000 m2 of leasable area in Bac Ninh and Hung Yen, bringing the total market supply to more than 1.3 million m2.

In particular, there is a notable trend of mixed-use projects. These facilities provide suitable space for both warehouse and factory uses, attracting a diverse range of tenants and accelerating occupancy rates.

Overall, with supply continuing to expand, the market will continue to be competitive, posing challenges in leasing, with tenants maintaining their bargaining position with significant incentives being offered in the form of direct discounts, longer rent-free periods, etc.