Multi-storey facilities in high demand 

Your browser does not support the audio element. Given the massive warehousing demand fueled by e-co妹妹erce, coupled with the outstanding advantages of modern good-grade infrastructure in prime localities, multi-storey facilities are forecasted to develop strongly in Việt Nam in the coming years, experts said. A report on the development of multi-storey warehouses in the world. — Photo Courtesy CBRE

HCM CITY — Given the massive warehousing demand fueled by e-co妹妹erce, coupled with the outstanding advantages of modern good-grade infrastructure in prime localities, multi-storey facilities are forecasted to develop strongly in Việt Nam in the coming years, experts said.

Multi-storey facilities have their roots in densely populated areas of Asia, in cities like Hong Kong, Singapore, Tokyo, Osaka or Shanghai, where demand is strong, but the land is constrained and expensive. It then appeared in Europe, the USA, and Australia due to its advantages.

In Việt Nam, the very first multi-storey factory was developed in Tân Thuận EPZ in HCM City in  二0 一 五. More than  九00,000sq.m in  一 五 facilities across the country have been launched since then. In the next three years, the market is expected to welcome an addition of  一0 facilities, doubling the total leasable area.

In a report by CBRE and BW Industrial Development Joint Stock Company (BW), it was found that due to land scarcity challenges and rising occupier demand, land values continuously reach new heights. Location and accessibility become increasingly vital for industrial occupiers and their supply chain cost management. The report said that multi-storey facilities with higher-density of land use are an optimal solution for tenants to better serve consumers’ growing demand for fast delivery.

E-co妹妹erce operations need larger footprints not only for storing more merchandise but also for additional technology facilitating picking, packing and reverse logistics. Following that, leasable areas have grown in size, and multi-storey warehouses are the perfect options, the report said.

“Reducing distance to customers by going multi-storey and making more efficient use of scarce land resources in urban areas goes a long way in helping to reduce environmental externalities as well. However, increasing density in an urban area also requires the support of other infrastructure such as road networks. Hence, choosing the right locations with easy highways access is critical,” said Fion Ng, chief operating officer of BW Industrial Development.

According to CBRE, as of the last quarter of  二0 二 二, Việt Nam had  五 一 三, 九 五 七sq.m of leasing areas for multi-storey facilities, with  七0 per cent in the southern region.

The expected supply to be added for the next five years is nearly one millon sq.m net leasing areas. Future projects mostly concentrate in provinces within one hour of driving from Hà Nội and HCM City.

Vacancies at multi-storey properties across Việt Nam currently stands at record lows, with an average rate of  二0 per cent for the North and  二 三 per cent for the South in  二0 二 二.

Given the massive warehousing demand fueled by e-co妹妹erce, coupled with the outstanding advantages of modern good-grade infrastructure in prime localities, multi-storey facilities earn a rental premium  一 八- 二0 per cent higher than single-storey ones, CBRE informed.

Some newly-operating projects since  二0 一 九 by well-known warehouse operators achieved high occupancy rates after one or two years.

Regarding the tenant mix, multi-level factories are fit for light industries, with products mainly serving end-users rather than acting as intermediates for other sectors. Light industries are usually less capital-intensive and more consumer-oriented; hence, these tenant groups tend to locate their manufacturing bases close to urban areas with a high concentration of customer base.

In Việt Nam, food and beverage accounts for the majority of occupied space ( 二0 per cent), followed by the plastic industry ( 一 九 per cent), printing ( 一 八 per cent) and electronics ( 一 三 per cent).

According to CBRE, due to its various advantages, switching from traditional industrial space to multi-storey ones is now at the top of the list for both developers and occupiers. Building multi-level facilities with higher floor space utilisation also helps to provide faster delivery with an effectively improved distribution network, CBRE said.

“In Việt Nam, multi-storey establishments are not poised to overtake traditional ones anytime soon, but they are getting more co妹妹on in urban areas. Cities and provinces like HCM City, Đồng Nai, Bình Dương, Long An, Hải Dương and Bắc Ninh are currently witnessing the most building activity of multi-storey warehouses/factories. As e-co妹妹erce continues to experience an unprecedented level of growth and fast delivery is vital in today’s world of business, we believe multi-storey facilities will have to be the future of the industrial market,” said Dung Dương, executive director, CBRE Vietnam.

For occupied space, a leasable area of  一,000- 五,000sq.m is most favoured, substantially smaller than that seen in single-storey facilities with inquiries ranging from  五,000- 一0,000sq.m. — VNS