News Oct 03 23

Industrial for Rent Searching: Must-know Terms to Get the Best Deal

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Spacious industrial for rent in Hai Phong, Vietnam.
Spacious factories for lease in Hai Phong, Vietnam. Photo from CORE5.

When embarking on the search for a suitable industrial for rent, prospective tenants encounter a complex web of industry-specific terminology. To navigate this terrain effectively and secure the ideal industrial space for rent, it is crucial to grasp key industry terms.

In this concise guide, we will shed light on essential concepts and jargon, empowering you to make informed decisions when seeking an industrial for rent.

Industrial terms tenants must know before leasing

1. Built-to-suit

A built-to-suit factory for lease is an industrial building designed and tailored for a specific tenant based on their demands. When building a built-to-suit factory, the landlord will have to analyse the client’s demand and the market’s requirements carefully in order to create a customised design plan that fits.

Typically, companies seek built-to-suit factories when their business includes innovative aspects that make it impossible to find an industrial for rent that matches the market.

As a result, the built-to-suit factory is costly since it requires a significant amount of investment, from market research and consultation to architectural planning and construction.

2. Ready-built factory for lease

CORE5 Hai Phong - world-class ready-built industrial for rent in Vietnam.
CORE5 Hai Phong – world-class ready-built industrial for rent village in Vietnam. Photo from CORE5.

In contrast, a ready-built terraced factory for lease is a building that is built based on general industrial requirements and not for any specific purpose. The factory will be constructed first, and after that, it will be marketed and leased to a tenant.

Most ready-built factories are constructed with the same approach, the same design plan, and the same standard. As a result, it is quite difficult to customise the industrial for rent in terms of structure and space to fit one’s demands.

However, since the factory is ready-built, tenants don’t need to wait for long to move in. Sometimes, they can start producing a few weeks after the agreement is signed. More importantly, the investment fee and rental rate for a ready-built factory are surely lower than a self-built one.

3. Class A Building

In real estate, rental buildings can be classified into different classes based on their quality and rental rate.

To be specific, if the building is well-located in major employment centres with good transit, vehicular, and pedestrian access and rents in the top 30 or 40 percent of the marketplace, then that is considered a “Class A building”.

Besides, the “Class A building” is usually located near retail stores and casual restaurants, making it suitable for common office workers’ demands.

Class A building with modern and sustainable design.
Class A building with modern and sustainable design. Photo from Pexels.

4. Class C Building

Class C buildings are properties with rents in the bottom 10 to 20 percent of the marketplace. They are located far away from employment centres, with less access to locations related to the common needs of workers like retail, casual restaurants, and transit. Besides, the Class C buildings are older than the Class B and Class C buildings.

As a result, Class C buildings can be rented at a lower rate than Class B and Class A buildings.

5. Class B Building

As its name suggested, Class B is the middle-quality building with rents between Class A and Class C. In terms of location, Class B buildings are located near or in fairly close proximity to major employment centres with fair transit. They are also based near moderate retail centres and casual restaurants.

Most middle-sized enterprises choose to place their offices in Class B buildings since they are still close enough to major centres, which is convenient but also not too pricey for a middle-sized company to invest in.

Understanding industrial for rent common terms: Final thoughts

Above are the top 5 common industrial terms tenants must know when seeking a good building for lease. Follow our fanpage and subscribe to our newsletter to stay updated on the latest market news and insights.

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