After a period of stagnation, the market for ready-built warehouses and factories in the South is beginning to see more transactions and shows many positive long-term prospects.
More favorable demand
In Q3 2024, the modern ready-built warehouse segment in the South added more than 103,000 m2 of new warehouse space, developed by BWID and KCN Vietnam.
Specifically, BWID marked its presence in Long An with the completion of a two-story warehouse project totaling 64,000 m2. Meanwhile, KCN Vietnam simultaneously launched Phase II of its projects in Ho Nai Industrial Park (Dong Nai) and Phu An Thanh Industrial Park (Long An), providing nearly 40,000 m2 of additional multi-functional space for both warehousing and manufacturing purposes.
The trend of converting property functions continued to be observed in the past quarter. According to a report by JLL Vietnam, in the northern part of Binh Duong province, over 18,000 m2 of a ready-built warehouse project was converted into a ready-built factory. By the end of Q3 2024, the total supply of modern ready-built warehouses increased to 2 million m2, a 4.4% increase quarter-on-quarter and a 14.7% increase year-on-year. Of this, BWID and Mapletree accounted for 30% and 20% respectively of the total supply.
The industrial real estate market used to be a traditional market, primarily developed by domestic investors. However, in recent years, we have seen stronger interest and investment from foreign investors, particularly from Singapore, South Korea, and Thailand. 
- Ms. Pham Ngoc Thien Thanh, Head of Research and Consulting at CBRE in Ho Chi Minh City
Supply is increasing, and occupancy rates are also favorable. According to JLL, after a period of stagnation, the Southern warehousing market entered the second half of the year with positive net absorption, reaching nearly 160,000 m2 in Q3 2024. New leases were mainly signed by tenants serving the domestic market, including manufacturers and third-party logistics (3PL) providers. Accordingly, facilities located in core areas with convenient connections to Ho Chi Minh City continue to be in high demand.
CBRE also noted vibrant leasing activity in both warehouse and ready-built factory spaces during the past quarter. The average occupancy rate for warehouses increased by 7% compared to the previous quarter, reaching 68%; the occupancy rate for ready-built factories increased by 3% compared to the previous quarter, reaching 84%. Clients seeking ready-built warehouse space in the South came from manufacturers in the high-tech, electronics components, and logistics sectors, alongside the expansion of e-commerce companies.
Alex Crane, Managing Director of Knight Frank Vietnam, commented that due to external factors, investors are approaching the market cautiously, but the market still shows some signs of recovery. He believes that improved supply, along with a slight increase in asking rents, indicates growing business confidence in the long-term prospects of the market.
“The continued development and operation of ready-built factory space is a positive sign, giving tenants more incentive to consider Vietnam as a suitable destination for investment or business expansion,” said Alex Crane.
Furthermore, according to this expert, the warehousing market in Southern Vietnam depends primarily on export demand and domestic consumption growth. After 2024, with the conclusion of elections worldwide , especially the US presidential election, market demand will become clearer and may further boost warehousing needs in Southern Vietnam.
Lowering prices to boost liquidity.
Market liquidity in the warehouse and factory segment has improved significantly, but Ms. Trang Le, Senior Director of Consulting and Research (JLL Vietnam), observes that demand remains relatively low compared to the end of previous years. “Exports have not fully recovered, so distribution centers are maintaining their current scale instead of expanding to anticipate the usual surge in goods at the end of the year.”
To maintain liquidity, Ms. Trang said that some projects with low rental yields have adopted a more aggressive demand stimulation strategy through price reductions. In particular, in emerging areas outside the city center, rental prices in the third quarter decreased significantly compared to the previous quarter, while prices in the core area remained stable.
The average asking rent for modern, ready-built warehouses in the South declined slightly to $4.85/m2/month, down 0.4% quarter-on-quarter, but still up 3.1% year-on-year.
“Landlords remain flexible and facilitate negotiations to support tenants amidst a slow market. One notable incentive at some newly completed warehouses is a rent-free period of over six months for a three-year lease,” Ms. Trang added. The leasing situation is expected to improve in the final months of the year, as the fourth quarter is typically the peak season, but the expected improvement is not expected to be dramatic.
Sharing the same view, Alex Crane believes that, in the short term, the warehouse market will face some difficulties due to increased supply and decreased absorption. However, this expert believes that the medium- to long-term outlook for industrial real estate in the South remains very positive, with many high-quality projects offering affordable rental rates.
Looking ahead to 2025, Knight Frank experts predict a significant market recovery. Several previously delayed projects have now been completed, coupled with growing investor confidence, all of which are expected to drive increased demand for industrial land. The region's strategic location, improved infrastructure, and favorable policies will continue to play a key role in attracting foreign direct investment and boosting economic growth.
Source: https://baodautu.vn/batdongsan/thi-truong-nha-kho-nha-xuong-khoi-sac-d227553.html
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