According to the latest real estate information from Jones Lang LaSalle (JLL) Vietnam, retail space occupancy and rental prices continue to grow steadily in the city centers but retail spaces and shopping centers that are integrated with residential properties in outlying areas face long-term vacancy issues.
JLL’s Vietnam Property Market Brief 2Q19 says that the retail supply in Hanoi Ho Chi Minh City now exceeds 2 million square meters with occupancy rates of 88% in Hanoi and 90% in Ho Chi Minh City.
However, commercial retail space in outlying areas has experienced long-term vacancies due to a lack of knowledge about retail design and integration by developers. In some cases, retail spaces are too big for a single retail company, supermarket or a showroom to fill the entire area. JLL suggests that Vietnamese developments change the purpose of their commercial areas into other types of spaces that can serve the needs of residents or surrounding areas. Developers could turn the retail space into co-working office space, product displays, fitness, or last-mile delivery storage thanks to strong growth of e-commerce and technology companies.
JLL’s report notes that the continuing and expanding demand from start-up companies offers a range of potential solutions for the empty retail spaces in outlying districts.
The evolution of space will be a key long-term trend and JLL”s report says, “We anticipate that this will be one of the key trends over the next ten years; retail spaces throughout the city will need to re-position themselves to remain attractive in this fast-moving and dynamic sector. Failure to adapt and remain present will undoubtedly lead to high vacancy levels.”
DeskMag noted in an article in late 2017 that, “Coworking spaces have served a plethora of modern workers through physical spaces. There have been office blocks, private member clubs, coffee shops and more. Now, there’s a new trend on the horizon: coworking spaces in shopping centers. While this might be an innovative environment for coworking spaces, the arrangement also forms part of the retail industry’s move towards a new shopping mall model emerging in 2030. This trend isn’t constrained by any region; it’s unfolding on a global level with hotspots including San Francisco, Dublin, Shanghai, Melbourne or Moscow.”
“Diversification of tenants and technological enhancements might have been pursued by shopping centers as survival strategies in the past, but now are we seeing coworking spaces enter the mix. Coworking operators are taking space in shopping centers and shopping centers are developing their own coworking brands.”
Based upon JLL Vietnam’s latest report, the global trend of diversifying retail space into new service areas is now coming to Vietnam, and retail shopping centers and other retail centers are expected to adapt and change in years to come.