Finding a balance between an accessible location and a reasonable rental price is critical when choosing a warehouse location that will affect every part of a business.
The location of a warehouse has a direct impact on the company’s performance, costs, and overall client experience. Deciding whether a company should buy or lease a warehouse is difficult since the two have pros and cons for Vietnam’s market.
However, the best warehouse location in Vietnam that is right for each enterprise can enhance a company’s efficiency regardless of its characteristics.
Reasons for Buying/Renting Warehouses?
A warehouse is a necessary facility for any company that deals with the manufacturing, transportation, importation, or exportation of goods. Warehousing is useful when a firm is just in the stage of starting up or expanding operations.
Manufacturers are always under pressure to enhance productivity and lower operating costs when they have to invest in industrial property. An enterprise can improve their production workflow and productivity by figuring out the best approach to handle procurement, storage, distribution, and logistics. Getting warehouse space and supply chain management under control will help businesses increase their profit margins quickly.
The benefits of warehousing in logistics are numerous, but one that sticks out is its potential to minimize the time it takes for goods or resources to reach their destination. As a result, companies have fewer days of downtime and are more productive because they will be able to get back on track faster.
For some reasons below, it’s critical for a company’s growth to have a trustworthy warehousing method for your stocks.
1. Ensure Safety
Aside from the main objective of storing stuff, warehousing helps in the preservation of goods against water, fire, theft, and climate change. Warehouses reduce spoilage, mistakes, accidents, omissions, breakage, and quality degradation, among other things, thanks to technological developments, safety measures, and computerization.
2. Reduce Human Involved
Warehouses are now often huge basic structures in industrial zones or city and municipal offices with loading docks for loading and unloading vehicles from trains, seaports, and airports. They also have forklifts and automated cranes in the warehouse to transport things from one location to another. Some warehouses are totally automated, with no humans on the premises, reducing waste and making loading and unloading easier.
3. Ensure The Workflow of The Supply Chain
Warehouses guarantee that such seasonal items are available throughout the year, without interruption. Moreover, warehouses allow firms to make items throughout the year without having to worry about running out of raw materials. Raw materials in large quantities that are required by producers are typically produced in bulk.
4. Reduce Risk
The goods kept in a warehouse are insured at the warehouse owner’s risk. Storing items at an off-site warehouse reduces inventory loss due to theft, fire, and other factors, and shifts the risk to the warehouse.
Business owners are protected by the warehouse company’s insurance, which is often considerably more extensive owing to the scope of operations, and companies do not have to pay the price.
5. Financing Advantages
There are the added benefits provided by bonded warehouses, which are government-licensed institutions that accept imported products for storage until customs tax is paid. By paying customs duty proportionally, storing imported products or resources to be exported in a bonded warehouse helps control expenses.
Should You Buy or Rent a Warehouse?
When a company desires a warehouse for their operations, they may be forced to choose between purchasing a warehouse property and renting a warehouse space. Both of these solutions have benefits and drawbacks, making it difficult to pick between them.
Buying a Warehouse
– Fixed costs: a business does not have the responsibility of paying rental costs.
– Control of the property: more control over the layout and design of the building.
– Equity: companies may use the equity in their business and the value of the property as leverage for acquiring loans, funding, and other business activities.
– High upfront costs: a large initial investment.
– Increased financial risk: in the event of financial difficulties, firms may have to sell the home for less than the purchase price.
– Maintenance bills: a business is responsible for all of the necessary maintenance and repairs.
Renting a Warehouse
– More choices: in general, there will be a larger selection of facilities available for rent than there will be for sale, offering more options in terms of size and kind of warehouse.
– Less time spent on management: a landlord or property management company can support the running of a warehouse.
– Easier to relocate: if the old warehouse is not suitable for business objectives, an enterprise will easily switch to another.
– High rental costs: in most cases, monthly rent payments will be more than mortgage payments on the same warehouse.
– Less control: property owners have control over the decisions of a warehouse.
– Limited growth: If the company grows quicker than expected, it will be far more difficult (if not impossible) to adapt the present facilities to match demand, necessitating an expensive move instead.
If you have enough cash for a down payment and six months’ worth of mortgage payments without putting your firm under a financial constraint, it’s usually a better idea to purchase. If you’re looking for a way to save money, purchasing can be a fantastic alternative.
Buying could be a better option if a company wants to:
– Generate another revenue stream.
– Increase equity.
– More control over a warehouse including design, layout, repair and maintenance of the property.
In contrast, renting is good for a business if they want:
– The flexibility to switch to another warehouse
– More tax benefits
– Operate in a warehouse that requires a high initial investment.
– Less responsibility for decisions made in a warehouse
What is The Best Warehouse Location in Vietnam?
Factors That Decide Why One Location is The Best
The right warehouse location may make all the difference in a company’s effectiveness, efficiency, and profitability. Leasing or buying a warehouse is a big choice, and picking the appropriate location may make a big difference in a company’s ability to compete and serve consumers effectively.
When it involves selecting a location, it is important to gauge all of the subsequent factors, make notes, then compare your notes to all or any of the existing criteria. The ultimate selection ought to be created solely at the end of the information that has been gathered and analyzed. For the warehouse industry in Vietnam, to find the best warehouse location in Vietnam, business owners need to consider some factors.
1. Get Access to The Main Transportation Networks
The shipping procedure will be streamlined due to the closeness to major transportation networks. The ideal warehouse site will strike a balance between closeness to customers and distance from the manufacturing plant. The goal is to be close to the delivery region, with fast access to major roads or highways – all while reducing traffic congestion, which becomes increasingly challenging as demand rises with population density. All of these concerns with carriers will have a significant influence on total transportation expenses.
2. Demands of Consumers
It’s critical to locate your warehouses as close as possible to your customers in order to provide the greatest possible customer experience: shorter delivery times and lower shipping costs will boost customer satisfaction and loyalty.
When picking a warehouse site, prioritize heavily populated and rich areas, as e-commerce demand is likely to be stronger there than everywhere else. As a result, population density has a favorable correlation with last-mile delivery.
3. The Availability of A Labour Force
Not every place has the same level of worker quality, affordability, or stability. Low worker supply and strong demand in densely populated areas will push up pay and raise turnover rates. In terms of worker availability, the ideal location is one that strikes the correct balance between income levels and educational attainment.
4. Tax and Rent Rates
There is a hidden cost that has a detrimental impact on the low leasing rates; thus, cost considerations should always be taken into account in any element of the business.
Tax incentives, government rules, and tax structures should all be taken into account. Your company may also profit from government-sponsored special initiatives aimed at promoting specific industrial segments.
5. Key Features of Warehouses for Rent from Savills Industrial
While both renting and purchasing have benefits and drawbacks, the great majority of business owners will find that renting warehouse space is more profitable. Savills Industrial provides customers with variable options of warehouses which can meet their requirements for the best warehouse location in Vietnam.
– Location: Yen Phong, Bac Ninh – key economic region
– Total area:120,000 m²
– Vacant area:70,000 m²
– Price: Contact
– Key features:
+ Easy transportation connection: near National Highway 18, 20 km from Noi Bai Airport, 34 km from the center of Ha Noi
+ Skilled workforce
+ Large consumer markets
+ A-class warehouse
+ Modern facilities: parking area, solar panels,…
+ LEED Gold Certification
– Location: Long Bien, Hanoi
– Total area: 8,900 m²
– Vacant area: 4,400 m²
– Price: Contact
– Key features:
+ Easy to access to main regions
+ Large capacity: 5 tons/m2
+ Advanced facilities
+ Preferential incentives
– Location: Yen My, Hung Yen
– Total area: 282,000 m²
– Vacant area: 59,456 m²
– Price: Contact
– Key features:
+ Competitive rental price
+ Skilled labor force
+ Modern infrastructure
+ Modern warehouse facilities
– Location: Tu Son, Bac Ninh
– Total area: 278,000 m²
– Vacant area: 54,000 m²
– Price: Contact
– Key features:
+ Strategic location
+ Advanced technology
+ Easy for product distribution
+ Modern warehouse management system
– Location: Long Thanh, Dong Nai
– Total area: 60,000 m²
– Vacant area: 36,000 m²
– Price: $5/m²
– Key features:
+ International standard
+ Suitable for light industries
+ Convenient transportation network
+ Synchronous planning
The location of warehouses plays a crucial part in business performance in every aspect of a company. Therefore, a firm should take more time to plan and find the best warehouse in Vietnam that is appropriate for a firm’s objectives. Savills Industrial is proud of being Vietnam’s leading industrial real estate service. We are willing to support our customers in determining if renting or selling your warehouse or commercial property is the best option in today’s market. We deliver excellent consulting services from industry specialists with in-depth knowledge of the market, thanks to a team of leading experts in Vietnam.
If you are in need of industrial real estate buying, selling and leasing services with the help of experts, contact Mr. John Campbell for more information now!
For our latest publish of Industrial market update: Industrial Insider Q1 2022