In the fast-paced world of real estate, industrial property is frequently disregarded. Under the commercial banner, however, it remains an important part. People are more inclined to think about where they work and shop, rather than where their items come from, when they list retail and office as the key sectors of business activity.
Its importance in the real estate sector should not be overlooked. According to Julie Satow of the New York Times, Industrial Real Estate is a leading indication of commercial real estate success. Simply put, when consumers need certain things, manufacturing and inventory storage must follow, which is a prerequisite for hiring additional employees and adding offices to expand the firm financially.
Industrial property is a segment with significant potential in many parts of Asia. This is especially true in Vietnam, where foreign investment in the industrial sector has increased dramatically as a result of:
- Labor costs are low (almost half of China)
- Low investment costs: land prices, maritime freight
- Corporate income tax breaks
- Proactive in trade negotiations: AEC, EU FTA, Korea
It’s critical to understand the variations between the various types of industrial real estate property before investing or getting involved in this industry for other reasons. Let’s look at it more closely:
FACILITIES FOR FABRICATION/MANUFACTURING PLANTS
When it comes to industrial property, the most popular image is of factories where items are assembled and produced. Some factories are large and used for heavy production, while others are modest and used only for assembly. Some manufacturers rely largely on labour, while others use robotics and automation, while yet others use a combination of both. The average office space in both large and small factories is less than 20%.
Companies must still pick what style of operation they want to run when it comes to manufacturing plants. For instance:
RBFs (Ready-Built-Factories) : can provide tenants with investment and financial flexibility, as well as development opportunities on prepared property as their firm expands. They also benefit businesses who wish to enter the market swiftly and begin operations right away.
Built-to-Suit Factories: are larger facilities that are tailored to the demands of the tenants. The procedure takes longer, and both couples must make greater financial, time, and effort commitments. The tenant benefits from a more customised solution, but leases are often longer, ranging from 10 to 15 years, to allow the landlord to repay its investment during the lease term.
WAREHOUSES FOR DISTRIBUTION
These are storage facilities for commodities destined for distribution. It is used to store products while they travel from the manufacturer to the distributor before being delivered to their different retail locations. As a result, the facility’s location is critical — how accessible is it to nearby air and sea ports? Distribution warehouses benefit manufacturing companies, third-party distributors, and retailers alike since they save time, money, and provide peace of mind.
WAREHOUSES IN PRIVACY
Private warehouses are more commonly utilised for storage than delivery, such as cold storage for perishable goods. They are erected near manufacturing operations and are owned and operated by manufacturers. They are often smaller than their equivalents in distribution. Users gain from a degree of control, but because of the fixed size and cost, it might be pricey in the short run.
WAREHOUSING/OFFICE/R&D/SHOWROOMS/FLEX SPACE
Flex industrial buildings are built to meet the needs of a variety of tenants. Known as ‘hybrid’ space, these structures can include any or all of the following: office space, retail showrooms, warehouse and distribution, and R&D. Because many R&D buildings are leased by tenants in hi-tech, electronics, or biotechnology, ‘flex’ space appeals because it allows for a greater range of functions in one location. In comparison to pure manufacturing and warehouse buildings, flex spaces typically have lower ceiling heights and a higher amount of office space, ranging anywhere from 40% to 60%.
INFORMATION CENTERS
Electrical switching, uninterruptible power supply, backup generators, ventilation, and cooling systems are all required for firms in the hi-tech industry. They’re close to important power and communication connections, allowing them to house massive servers, and the buildings are well-secured to prevent unauthorised data access. In data centres, the higher the ceiling height, the better. Rising heat is accumulated above the cabinets, which is then reduced by mingling with cold air. Data centres are increasingly finding homes in industrial spaces in Vietnam, such as FPT Data Center in Tan Thuan Industrial Parks’ e-office section.
Learn More: Industrial Properties For Sale
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