Despite its importance, industrial property is sometimes neglected in the fast-paced and dynamic world of Canadian real estate. However, it continues to be an important element of the commercial sector. Some speculate that individuals have an inclination to select retail and office as the primary sectors of commercial activity because they are more inclined to think about where they work and where they buy rather than where their items are manufactured or distributed.
In the real estate market, it has a significant impact that should not be underestimated. Simply said, when there is a demand for a certain products from customers, manufacturing and inventory storage must be undertaken, which is a prerequisite to the employment of additional employees and the establishment of new offices in order to expand the firm financially.
Throughout Asia, industrial property is a market category with significant potential, particularly in the developing countries. Especially true in Vietnam, where the country has witnessed a significant increase in foreign investment in the industrial sector as a result of the following factors:
- Labor costs are at a minimum (almost half of China)
- Investment costs are reasonable, because to low land prices and low marine freight.
- Taxation on business profits that is favourable
- Pro-active in trade accords, such as the AEC, the EU Free Trade Agreement, and the Korea Free Trade Agreement.
In order to understand the variations between the many forms of industrial real estate available for investment or other uses, it is necessary to first understand the differences between industrial real estate and other types of property. Let’s take a closer look at what we’ve got:
MATERIAL PROCESSING AND FABRICATION ESTABLISHMENTS
When it comes to industrial property, the most obvious image that comes to mind is that of factories where items are assembled and manufactured. In addition to larger facilities with high output, there are smaller facilities with a focus on assembly and distribution. Some industries rely heavily on manpower to manufacture items, while others rely heavily on robots and automation to manufacture goods, while still others utilize a combination of the two. Typically, less than 20% of the total floor area is dedicated to office space in both big and small enterprises.
Manufacturing plants are still in the early stages of development, and corporations must determine exactly what sort of operation they want to run. As an illustration:
Building Ready-Built Factories: Building Ready-Built Factories (RBFs) can provide tenants greater flexibility in terms of investment and finance as well as growth prospects to prepared land as their business develops. They are also advantageous to businesses that wish to join the market swiftly and begin operations as soon as feasible….
Built-to-Suit Factories: These are often larger facilities that are tailored to the unique requirements of the tenants. The procedure is more time-consuming, and both parties are needed to make greater financial, time-, and effort commitments as a result. In exchange for a more customized solution for the tenant, lease terms are often longer, ranging from 10 to 15 years, in order to allow the landlord to recuperate its initial investment throughout the period of the lease term.
These are warehouses where products for distribution are kept until they are needed. It is used to store items while they are transferred from the producer to the distributor before they are distributed to their different retail locations. Location is also extremely important in this case – how close is the facility to nearby air and sea ports? How accessible is the facility? Distribution warehouses are used by manufacturing firms, third-party distributors, and retail establishments because the benefits of time savings, money savings, and peace of mind they provide make life easier.
Private warehouses are mostly utilized for storage purposes rather than distribution, for example, for cold storage of perishable goods. They are owned and maintained by manufacturers, and they are located close to their manufacturing facilities. They are often smaller in size than their counterparts in the distribution industry. Users of these facilities benefit from a degree of control, but it might be expensive in the short term due to the set size and expense of these facilities.
MULTI-PURPOSE FACILTIES (OFFICE, R&D, SHOWROOMS, WAREHOUSING)
Flex industrial buildings are intended to meet the demands of a variety of tenants in a single location. These facilities, which are sometimes referred to as ‘hybrid’ spaces, can comprise any or all of the following types of areas: office space, retail showrooms, warehousing and distribution, and research and development. Many R&D buildings are inhabited by tenants working in high-tech, electronics, or biotechnology, making ‘flex’ space desirable since it allows for a greater variety of purposes to be accommodated in a single location. Flex spaces often feature lower ceiling heights and a greater amount of office space than pure industrial and warehouse buildings, with office area proportions ranging anywhere from 20 percent to 40 percent.
These rooms, which are used by enterprises in the high-tech industry, must be equipped with electrical switching, uninterruptible power supply, backup generators, as well as ventilation and cooling. They are in close proximity to key power and communication cables, which allows them to host large numbers of servers, and the buildings place a high priority on security to prevent unwanted access to information. When it comes to data centre ceiling height, the higher the better in most cases. As the heat rises, the area above the cabinets gathers it, which is then reduced by mixing it with cool air.
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