During the two years of the Covid 19 pandemic, the demand for renting industrial parks and warehouses for logistics services decreased slightly due to restrictions on many economic activities enacted to contain the impact, significantly of the virus.
However, due to the expansion of e-commerce since the outbreak of the pandemic, the logistics industry has had a substantial growth rate. Many logistics companies have increased demand for warehouses and distribution facilities. At the same time, the leasing cost warehouse logistic service in Vietnam also changed significantly.
According to CBRE, it is expected that the recovery of the economy will make the leasing warehouse logistic service in Vietnam active again. The manufacturing market in Vietnam has grown gradually since restrictions have loosen.
For the last 10 months, new orders have reached the peak and this forecasts the remarkable growth of export orders.
In the first 2 months of 2022, manufacturing production increased by 10% in February, up from 2.8 percent in January.
Thanks to these reasons, warehouses or distribution centers that serve the logistics industry are actively sought after, for example warehouses in metropolitan areas, warehouses in urban regions and warehouses supporting last-mile delivery.
Vietnam was a top rising logistics market in 2021, according to Agility, a global logistics and freight company, placing eighth out of 50 nations.
Moreover, the expectation for the notable development of the logistics industry is one of the key drivers for the growth in demand of warehouses and logistics facilities. This is demonstrated by the impressive increase of total warehouse area and the price increased by 5-10% on a year-over-year basis.
Long An and Dong Nai province are developed as the new warehousing and distribution region beside Ho Chi Minh City and Binh Duong. Some billion USD projects between Vietnamese firms and international investors were signed. For example, JD.com funded a warehouse project with a total area of 10 ha in Duc Hoa district, Long An.
In addition, the Australian investor has also built its own warehouse complex in Can Giuoc district.
Trends of logistics service
Logistics service industry has transformed to meet the requirements of complex processes. Advanced technology is the key trend for the development of the logistics industry as well as the warehouse market.
For logistics firms to gain competitive advantages in the market, automation is a primary factor. With the development of e-commerce, many businesses have been pushed to prioritize high-speed operations through automated processes in order to fulfill orders faster and cope with demand surges more effectively.
Beside reducing physical tasks, technology allows companies to make complicated decisions. Advanced technology will also assist the process to operate more effectively, reduce total costs, optimize time consuming and add value to both customers and the national economy.
Furthermore, many logistics firms have an intention to build a sustainable zone including warehouse and distribution systems to adapt to climate change. As a main element that causes environmental problems, the logistics service industry has set a plan to reduce the emission of pollutants.
The Vietnam warehousing and storage industry have been gradually growing in size due to development in economy and population.
How to find the right ware house for logistics service
Since warehouses play an essential part of the logistics and supply chain network, the speed and effectiveness of your supply chain are heavily influenced by the warehouse being selected.
In the competitive market and the boom of ecommerce, warehouses for logistics services need to be considered in many aspects to reduce product cost and save time. This can contribute to the process of delivering products to end consumers.
For each enterprise, preferred warehouses should satisfy the general warehousing objectives. A must-choose warehouse should allow efficient accessibility, promote improved turnover, boost output, and reduce shrinkage in addition to basic storage facilities. A warehouse chosen should provide the highest level of protection for your items while in transit. Customers will be less likely to complain if their items were damaged in transportation as a result of delivery.
When it comes to picking a warehouse, location is crucial. To ensure timely and cost optimization delivery, make sure that warehouses for logistics are positioned sufficiently close to your consumers. You will be able to fulfill your customers’ satisfactions if you locate a warehouse in the proper area since you’ll be able to deliver their purchases in a couple of hours or days.
Having warehouses in the most suitable locations to reach customers can improve the performance of a company in general, whether you’re a localized merchant, a national supplier, or an international retailer.
For example, if you are extensively involved in importing and exporting activities, leasing a warehouse near a large port is a great benefit because it effectively supports your operation. Consider the following factors while evaluating the accessibility of your selected warehousing facility:
– Public transit is available.
– Conditions and safety of the road
– Traffic’s nature
– Highway connection
Excessive fuel consumption, lost time, and increased accident rates can all result from choosing a warehouse site with clogged roads, poor signage, and freeways lacking exit ramps.
Time waste may increase transportation costs and cause delays in delivery, reducing the synergies between suppliers and consumers.
When compared to those with a simple warehouse layout, warehousing facilities with different capacities give superior storage services. Choosing a warehouse that provides integrated solutions ensures that storage and distribution services are effective and smooth. Using the services of a warehouse that offers a wide variety of services ensures consistent service and a well-functioning supply chain network.
In terms of cost and nature of operations, asset-based warehouse solutions, for example, deliver greater value than a standard non-asset warehouse design.
When opposed to typical warehouse service providers, asset-based providers spend extensively in their buildings, vehicles, and people, allowing them to deliver a greater level of service.
In all areas, including warehousing, advancements in technology have resulted in enhanced service provision. Ask about the warehouse management system in this scenario.
Confirm that the processing and supply chain systems of the organization can be connected with shipping firms and other critical services.
Currently, warehouses that include modern technology like drones, pick-by-vision systems, and electronic data sharing are better at ensuring seamless operations. Adopting advanced technologies in warehousing is essential for guaranteeing effective operations.
Security and Insurance
While entrusting your products to a warehouse provider, it’s critical that you do a security audit to guarantee the warehouse’s safety and security procedures correspond with yours.
While security is crucial, having an appropriate insurance coverage in place for your items is as critical. Although the warehouse provider is likely to have a policy in place, understanding the terms is essential.
Companies should carefully analyze all of their storage needs when choosing a warehouse to ensure that all criteria are satisfied, including racked or bulk storage, adequate square area, and product compatibility. Because warehouses have different skills and capacities, it’s important to figure out which one is best for your organization.
The elements which are listed above seem to be quite comprehensive but in reality, there are many factors to consider when companies lease a warehouse for logistics service that need the engagement of experts. Hiring an agency that provides professors with in-depth knowledge in warehousing is a smart choice.
Furthermore, an agency can connect a company with lessors and introduce appropriate warehouse options for the company’s desires. At the same time, businesses will be informed of the exact pricing, deposits, and processes.
Savills Industrial Vietnam is proud to provide quality service that can support clients to acquire/lease satisfactory warehouses for logistics service in Vietnam.
The leasing cost warehouse logistic service in Vietnam
Factors that can affect the cost of logistics warehouse in Vietnam
Price of a warehouse can be determined by variable factors. The list below synthesizes some of the considerations that have an impact on the leasing cost for warehouse logistics service in Vietnam.
Location of a warehouse
The cost can vary heavily depending on the region a warehouse is located. For example, in Vietnam, Ho Chi Minh city has the highest leasing price among satellite cities.
In addition, the leasing cost for warehouse logistics service in Vietnam that is built in the South area is always higher than this in the North of Vietnam.
The rent rates and government’s regulations differ among regions so it has an effect on the leasing cost in general.
Quality of a warehouse
A good quality warehouse can increase the leasing cost but it can reduce risks occurring during operation. The expenses that are spent to handle the problems caused by a poor warehouse will exceed the leasing cost.
Otherwise, a low-standard warehouse will deteriorate sooner than that which is well-invested. The company has to fix the damages more often or they even abandon the warehouse.
Types of demand
Demand for warehouses is the decisive factor that affects the leasing cost of logistics warehouses in Vietnam. In some stages, the need for warehousing declined because of the pandemic. As a consequence, the expense a firm has to spend to lease a logistics warehouse at that time is lower than now.
Similarly, demand shapes the capacity and size of storage facilities. There are some kinds of warehouses that have higher demand for businesses. That leads to the cost for them being more expensive because the nature of economics is that prices will increase when demand increases.
The leasing cost warehouse logistic service in Vietnam on average
According to Savills Vietnam statistics, the leasing cost for warehouse logistics service in Vietnam has a difference between the North and South area.
In particular, the rental price of the Northern cities in 2020 was $4.1 per square metre per month while the figure in the South region was $4.4 per metre per month.
With an average monthly rental price of 5.5 US dollars per square meter in the first seven months of 2021, Ha Noi had the highest average monthly rental price for warehouses among the presented provinces. When it comes to warehouse leasing costs, Ho Chi Minh City came in second. The most developed warehousing sectors in Vietnam were found in Ha Noi and Ho Chi Minh City.
As a result, future warehouse leasing prices are likely to increase by 1.5-4 percent each year.
Some available warehouses from Savills that fit the description for logistic service
Savills provides warehouses that fully meet the quality standards in Vietnam. For example:
– Location: Long Bien, Hanoi
– Total area: 8,900 m2
– Vacant area: 4,400 m2
– Price: Contact
– Key features:
– Convenient transportation, easy to travel
– Height of the workshop: 11.6m and floor capacity 5 tons/m2
– Facilities: Fire Fighting system; heat insulation Roofing; Reinforced concrete flooring; Rolling doors etc.
– The landlord: long experience, supportive
– Incentives: Tax exemption for the first 2 years, 50% tax reduction for the next 4 years.
– Skilled workforce.
– Location: Hai An District, Hai Phong City
– Total area: 126,000 m2
– Vacant area: 70,388 m2
– Price: Contact
– Key features:
– Near Cat Bi International Airport, Hai Phong Seaports, and highways.
– International-standards infrastructure system
– Flexible size
– Fully licensing, constructional, technical, administration services,…
– Tax incentives
– Skilled-labor force
– Location: Tu Son, Bac Ninh
– Total area: 278,000 m2
– Vacant area: 54,000 m2
– Price: Contact
– Key features:
– Strategic location: 40 minutes to Ha Noi, two hours to Hai Phong’s port
– High-quality industrial production
– State-of-the-art technology
– High-quality warehouse facilities: micrologistics warehouse management system.
– Convenient for product distribution.
– Fully supported by the developer.
Savills Industrials, which provides factory rental services, is now a market leader in industrial real estate.
Savills Industrial remained committed to providing a trustworthy factory leasing service, ensuring that it satisfied all of the industry’s requirements for a respectable factory, including an operational location, competent people, and a corporate culture focused on long-term growth.
Savills Industrial is a professional services business that specializes in industrial real estate and investment management.
We established the Industrial & Logistic department to provide full logistics and multi-let industrial services in Vietnam after recognizing the demand. Mr. John Campbell from Savills Industrial can assist businesses in finding the perfect warehouse for rent in Vietnam if they are interested in hiring a factory for manufacturing or commercial purposes.
Download our full version of Savills Industrial’s 2022 market update.