The vibrant e-commerce sector and dwindling supply are driving a surge in demand for warehouses, as reported by real estate consultancies. In their report, JLL stated that the net absorption rate of ready-built warehouses in the north leaped 2.6-fold in the third quarter. Moreover, the net absorption rate reached 90,000 square meters.
Notably, not only retailers and e-commerce businesses but also manufacturers and distributors are increasingly seeking to rent warehouse spaces. Southern Vietnam also mirrors this heightened demand. The regions net absorption reached 86,000 sq.m.
In the third quarter, Cushman & Wakefield revealed an increase in ready-built factory and warehouse rents in the south. The absorption rates surged by 2.4- and 6.7-fold, respectively, compared to the previous quarter. The highest demand was observed in Dong Nai Province.
Experts say demand for warehouses will outgrow supply due to E-Commerce
Hanoi and HCMC’s warehouse supply has reached two million square meters. Additionally, it stands at 5.1 million square meters in HCMC. Some industrial parks and warehouses in these cities are almost fully occupied. Trang Bui, the general director of Cushman & Wakefield Vietnam, emphasized that demand is expected to increase further in the near future. She also noted that supply is struggling to keep pace with the rising demand.
Thomas Rooney, senior manager of industrial services at Savills Hanoi, emphasized that while the logistics market remains underutilized, there is a shortage of warehouse supply. The flourishing e-commerce sector is a major driver of this increasing demand.
E-commerce revenues grew by an estimated 25% year-on-year in the first half of this year, totaling US$10.3 billion. Expectations for the full year project a figure of $20.5 billion. This data comes from the Department of E-commerce and Digital Economy. It underscores the substantial impact of e-commerce on the demand for warehouse space.
Bui stressed that Vietnam is drawing in manufacturing and logistics companies, increasing the need for top-tier logistics real estate. Vietnam actively competes with global hubs such as Dubai, Hong Kong, Singapore, and Shanghai. It aims to establish itself as a central transit point for goods.
Cushman & Wakefield’s 2022 annual survey revealed that 40% of participants selected Vietnam as the second emerging market for investment after India.
JLL predicts that warehouse space in the north will increase by 700,000 sq.m next year, making it 1.6 times the current supply. This expansion will also include neighboring provinces such as Vinh Phuc, Bac Giang, and Quang Ninh. In the southern region, JLL anticipates the supply to almost double within the year.