Leasing factory in industrial zones is a popular solution for businesses expanding production. However, leasing costs can vary based on factors such as location, size, and included amenities. To help make an informed decision, KTG Industrial provides a list of factors influencing leasing prices and essential considerations before signing a lease agreement.
Current Factory Leasing Costs in Industrial Zones in Vietnam
In Vietnam, factory leasing costs in industrial zones range from 4-7 USD/m² per month. These prices are influenced by several factors such as location, type of factory, available infrastructure, lease duration, and market conditions.
- Geographical Location: Industrial zones in Ho Chi Minh City, Binh Duong, Long An, or Bac Ninh typically have higher leasing costs due to convenient transportation links and modern infrastructure. In contrast, areas farther from major urban centers tend to have more competitive prices.
- Type of Factory: Standard factory generally cost between 4-5 USD/m², while premium factory with modern designs optimized for production can cost 6-7 USD/m².
- Lease Duration: Long-term leases usually offer better rates compared to short-term contracts.
With the increase in Foreign Direct Investment (FDI) and growing demand from manufacturing businesses, leasing prices in key areas continue to rise. However, companies can optimize costs by selecting areas that align with their operational and expansion needs. Ultimately, the company’s development strategy will determine which location is the most suitable for leasing a factory.
Factory rental costs are an expense that businesses need to pay attention to.
Leasing Costs for Different Types of Factory in Vietnam
Different types of factory come with varying leasing costs. Below are the three most common types currently available:
Pre-built factory
This is the most convenient and time-saving option, especially suitable for small and medium-sized enterprises or those who want to start production immediately.
- Advantages:
- Ready for use with full amenities such as electricity, water, and office space.
- Saves on initial construction costs.
- Fast production setup due to the existing basic infrastructure.
- Suitable For:
- Start-up companies.
- Businesses needing temporary or medium-term production space.
Self-built factory
If you want full control over the design and optimization of space, as well as deciding on the structure and layout of the factory, self-built factory are the ideal choice.
- Advantages:
- Space is designed to meet specific needs, optimizing production processes.
- Saves on long-term leasing costs if there are plans for long-term production.
- Full control over managing and utilizing infrastructure.
- Disadvantages:
- Requires a large initial investment.
- Time-consuming construction and finishing.
- Suitable For:
- Businesses with strong financial resources.
- Companies needing large, specialized spaces or planning for long-term operations.
Shared factory
This modern model allows multiple businesses to share the same factory space and split operational costs.
- Advantages:
- Cost-effective leasing, particularly for small businesses or start-ups.
- Ability to share equipment, machinery, or utility services.
- Ideal for production trials or short-term projects.
- Disadvantages:
- Less privacy, which could impact production independence.
- Dependence on cooperation with other businesses sharing the space.
- Suitable For:
- Start-ups looking to save on initial costs.
- Businesses experimenting with production or needing flexible space for short periods.
There are many factors that affect the cost of renting a factory in an industrial park.
Factors Affecting Factory Leasing Costs in Industrial Zones Today
Factory Location
The location of a factory is the primary factor directly impacting leasing and sale prices. Factories located near major economic centers such as Ho Chi Minh City (HCMC) or Hanoi generally have higher prices due to advantages in infrastructure, transportation, and market access.
Businesses often choose locations close to large cities to optimize transportation and import-export costs. However, for small and medium-sized enterprises (SMEs) or foreign companies newly investing in Vietnam, leasing factories in neighboring provinces like Binh Duong, Dong Nai (near HCMC) or Bac Ninh, Hung Yen (near Hanoi) is a cost-effective solution.
Leasing costs in provinces adjacent to HCMC range from 4-7 USD/m²/month, with good quality infrastructure and convenience.
Factory Size and Layout
Choosing the appropriate factory size helps businesses optimize space usage and minimize unnecessary costs:
- Large factory: Typically equipped with modern infrastructure, suitable for large-scale businesses or those requiring diverse production needs. Large spaces also allow flexible division of space to optimize each production process.
- Small and Medium-sized Factory: Ideal for start-ups or SMEs, helping reduce initial investment costs. Factory sizes today offer a wide range of flexibility, from 240m² to over 10,000m², catering to diverse business needs. Beyond size, the factory structure also impacts construction costs and its ability to meet production requirements.
Structure
- Pre-engineered Steel Frame: Preferred for its high durability, good load-bearing capacity, and ease of expansion when needed.
- Ceiling Height: High ceilings support the installation of large machinery and efficient storage, suitable for heavy industries. Low ceilings are more appropriate for light manufacturing or office spaces.
Space Design
- Open Spaces: Provide flexibility in machinery placement and production process adjustments.
- Auxiliary Areas: factory with integrated office spaces, storage areas, and restrooms help optimize space and improve management convenience.
Factory Amenities
Leasing or purchasing factory often comes with additional support services, including:
- Legal Support: Administrative procedures and operational permits.
- Infrastructure Amenities: Consistent supply of electricity, water, internet, and waste treatment.
- Management Services: Security, regular maintenance, and repairs.
Although leasing factoríes with these additional services may cost more, the overall benefits are significant. Businesses can focus on production without worrying about external operational concerns.
The quality of construction is another factor that affects leasing prices. A factory that meets quality standards ensures:
- Durable Structure: Can withstand heavy loads, making it suitable for heavy industries or modern machinery use.
- Ventilation and Natural Lighting: Helps reduce operational costs and provides a safe and comfortable work environment for employees.
- Safety Standards: Compliance with fire safety (PCCC) regulations, drainage systems, and waste treatment standards.
High-quality factories not only reduce operational risks but also enhance production efficiency, helping businesses save on long-term costs.
Market Conditions
Economic conditions play a crucial role in determining factory leasing prices. During periods of economic growth, the demand for factory leasing rises, leading to an increase in rental prices. Conversely, during a recession, rental prices may decrease due to reduced demand. Businesses should regularly update and analyze macroeconomic trends to make strategic investment decisions, ensuring long-term efficiency and cost optimization.
Lease Contracts and Duration
Lease contracts and their durations are important factors that affect factory leasing prices and the interests of both tenants and landlords. A clear and detailed contract minimizes risks and protects both parties throughout the leasing period.
Contracts typically include terms on lease duration, rental price, and related provisions. Long-term contracts often offer more favorable rates and help businesses save on costs in the long run while avoiding price fluctuations during renewal periods. Carefully negotiating lease terms and duration will help businesses optimize costs and ensure stability.
Factory rentals in central areas will have higher prices.
Other Costs to Consider When Leasing a Factory in an Industrial Zone
Electricity, Water, and Internet Costs
These are essential costs for operating a factory. Businesses need to accurately estimate electricity, water, and internet consumption to factor them into production costs.
Choosing a factory that already provides these services can save costs and optimize production operations. If the factory does not provide these basic services, the business will need to equip them on its own, increasing initial costs and setup time.
Transportation Costs
Transportation costs depend on the location of the factory. If the factory is far from major transportation routes or market areas, businesses will incur additional costs to transport products to customers or partners.
Choosing a factory near ports, airports, or highways will help reduce transportation costs, minimize delivery times, and improve operational efficiency.
Maintenance and Repair Costs
Like any facility, a factory needs regular maintenance and repairs to ensure production operations are not disrupted. These costs include maintaining equipment, machinery, and infrastructure such as electricity systems, water, and ventilation.
Businesses should clearly define maintenance responsibilities in the lease agreement and budget for repair costs to ensure the factory remains in optimal working condition.
How to Choose a Factory with Reasonable Pricing
Factory Location
The location of the factory is a crucial factor when selecting a production site. Consider factors such as transportation connections with partners, proximity to abundant labor, and suitability for the company’s production needs. Additionally, think about the potential for long-term development in that area.
Factory Size
Each business has different operational needs, so the size of the factory should be flexible. Businesses should consider their industry specifics and production scale when choosing the right size. Choosing a space that is too large may lead to resource wastage, while a space that is too small can create overcrowding, affecting production efficiency.
For instance, a business producing household goods may require a large factory to store raw materials and finished products for flexible operations. On the other hand, a small-scale electronics manufacturing company with high-tech requirements may optimize production space with a smaller, smartly designed factory that helps save on operational costs.
factory Amenities
Leasing factory models should include amenities such as electricity, water, fire safety systems, transportation, loading/unloading services, and labor recruitment. These services support businesses during operations. Therefore, when selecting a factory for lease, businesses should ensure that these service components are clearly outlined in the contract to avoid disputes.
KTG Industrial – A Trusted Factory Leasing Provider in Vietnam
KTG Industrial specializes in leasing factories in industrial parks.
KTG Industrial is a brand developed through a partnership between Boustead Projects (Singapore) and Khai Toan Group (Vietnam), forming a strong joint venture known as BKIM. Combining international experience with local market knowledge, KTG Industrial offers optimal factory solutions, from design and construction to support services, helping businesses operate efficiently.
KTG Industrial’s factories are located in key economic zones such as Dong Nai and Bac Ninh, providing convenient connections to airports, seaports, and large consumer markets. KTG Industrial guarantees international quality and sustainability with features like wastewater treatment systems, solar panels, floor load capacities of 1-2 tons/m², floor heights of 0.2m – 0.3m, and clear heights of 6.5m – 8.7m.
Notable projects in Dong Nai include KTG Industrial Nhon Trach, KTG Industrial An Phuoc, and KTG Industrial Tam Phuoc. Choosing KTG means selecting a reliable partner with high-quality services, ensuring sustainable growth for businesses.
With KTG Industrial, you are not just leasing a factory but also receiving long-term support for your company’s sustainable development journey!
Conclusion
Factory leasing costs are not fixed but depend on various factors such as location, infrastructure, and support services. Therefore, businesses need to carefully analyze their needs and choose a reputable partner to ensure long-term benefits. A well-informed decision not only saves costs but also promotes sustainable growth for the company.
