Why is choosing an industrial park today no longer just about rental price?
For many years, when businesses searched for industrial parks to locate their factories, rental price was often the top priority. Industrial parks with low prices, acceptable locations, and clear legal status were usually the preferred choice. However, in the current context, especially for FDI businesses, the decision to choose an industrial park is becoming much more complex and strategic . Rental price is still important, but it is no longer the sole deciding factor .
1. The new landscape is changing how businesses choose industrial parks.
The industrial investment market is being simultaneously impacted by multiple factors:
- Global supply chains are becoming increasingly tight and transparent.
- Demands from partners and export markets are becoming increasingly high.
- The pressure to optimize costs is not only at the input stage, but throughout the entire project lifecycle.
- The need to expand and adjust production models over time.
In this context, the decision to lease land or factory space in an industrial park is no longer a short-term decision , but one that affects the business’s operation for 20–30 years.
2. The rental price is only the initial cost, not the total cost.
One common mistake is evaluating industrial parks primarily based on the initial rental price . In reality, the rental price reflects only a very small fraction of the total costs a business will incur.
Besides rental costs, businesses also face:
- Infrastructure operating costs throughout the lease period.
- Costs of adjustments and renovations when expanding production.
- Costs incurred due to infrastructure not meeting new requirements.
- Indirect costs incurred when failing to meet partner requirements.
An industrial park with low rental rates but limited or inflexible infrastructure can lead to significantly higher overall costs in the long term .
3. Choosing an industrial park "locks in" many long-term factors.
When businesses sign land or factory lease agreements, they simultaneously “lock in” several important factors, including:
- Technical infrastructure and surrounding environment conditions
- Future scalability
- The ability to adapt when business strategy changes.
- The degree of compliance with supply chain requirements.
These factors are very difficult to change once the factory is operational. Therefore, choosing an industrial park is not just about selecting a location, but about choosing a long-term operating environment for the business .
4. As demands from the market and partners become increasingly stringent.
For many FDI businesses, demands from international customers and partners are increasingly directly impacting production operations. Criteria related to governance, environment, and transparency are being incorporated into the supply chain in an increasingly clear manner.
In this context, industrial parks are not just locations for factories, but also part of the manufacturing ecosystem . Choosing the wrong industrial park can cause businesses to face difficulties in:
Maintain or expand cooperation with partners.
Adapting to new market demands
Ensuring long-term stability and sustainability.
5. Risks often only emerge after a business has already established itself.
It’s worth noting that many risks associated with industrial parks don’t appear right from the start . They usually become apparent after several years of operation, when businesses:
- Expand production scale
- Adjusting the product or technology
- Facing new demands from the market.
At this point, relocating the industrial park is almost impossible, and businesses are forced to accept high adjustment costs or limited development potential.
6. The new role of industrial park consultants
In this context, the role of industrial park consulting firms is also changing significantly. Consulting is no longer just:
- Introducing the floor plan.
- Compare rental prices
- Contract negotiation support
But it needs to be expanded to include:
- Helping businesses identify long-term risks.
- Assessing the suitability of the industrial park with the development strategy.
- Supporting businesses in making decisions based on the big picture.
This is why many FDI businesses seek consulting firms early on , instead of just looking for transaction brokers.
7. Selecting industrial zones in a long-term development mindset.
In reality, making the right decision about choosing an industrial park from the outset can help businesses:
- Better cost control in the long term.
- The strategy is easily scalable and adaptable.
- Minimizing operational risks.
- Increase stability and competitiveness.
Conversely, choosing based solely on rental price may offer short-term benefits, but it carries many uncontrollable risks in the long run.
8. Vinascreal's approach
At Vinascreal, we approach industrial park selection from the perspective of long-term investment decisions , going beyond just land lease transactions.
Vinascreal focuses on:
Analyze the suitability of the industrial park to the enterprise's development strategy.
It helps investors identify factors that could affect future operations.
Partnering with businesses right from the decision-making stage.
This approach helps businesses not only select the right industrial park in the present , but also maintain room for growth in the years to come .
Conclusion
Looking beyond the initial rental price and thoroughly assessing long-term operational factors and risks will help businesses make more sound and sustainable investment decisions.