Warehouses and Factories in Cambodia

A warehouse is a type of real estate typically used by companies in the manufacturing, wholesale, transport, and import/export industry. It is usually located in the outskirts of cities where space is larger but still accessible.

This is a structure generally considered as commercial or industrial space. There is a need for this type of property for businesses that require storage space to temporarily house their goods prior to the actual trade.

General Characteristics of a Warehouse

Warehouses are built for specific purposes depending on the type of business that it is used for. However, they usually have the following characteristics:

• Warehouses have loading and unloading docks used to transport goods or merchandise.
• The area of the structure is big enough to house large equipment including forklift, cranes and ISO standard pallets and pallet racks.
• There are many types of storage systems in a warehouse. The most common are:
  • Pallet racking
  • Cantilever racking
  • Mezzanine
  • Vertical Lift Modules
  • Horizontal Carousels
  • Vertical Carousels

Types of Warehouses

Depending on the type of merchandise being stored, warehouses differentiate in the type of storage equipment they use and the area with which they need to be built.

• Retail Warehouse - refers to warehouses used by department stores or retail shops to house finished items or completed stocks. It can also be used by large manufacturing companies, clothing stores and factories.
  • This kind of warehouse are smaller and have clean racks and hangers where they can store fabrics and finished products
  • Stocks are labeled depending on where they will be shipped, the type of item and the quantity.
• Cool Warehouses and Cold Storage - are warehouses with large refrigerators andcentralized cooling system. They are generally used by factories that manufacture food items like ice cream, meat products or agricultural items.
  • Cold storages help stabilize market prices by distributing goods on
    demand.
  • Edible items are stored in large freezers sometimes as low as -25 C to avoid rotting and insect damage.
  • Freon and Ammonia compressors are commonly used to maintain temperature. Both are cheap cooling systems.
  • Insulation is also important to reduce temperature and keep different areas of the warehouse at different temperatures.
  • A cold storage facility needs to be in close proximity to markets, have an uninterrupted power supply to avoid spoilage and accessible to heavy vehicles.
• Overseas Warehouse - are used by businesses where the main manufacturing plant is located outside of the country. It is a place where wholesale buyers can negotiate items or a point of location where items can be stored until it is distributed to the market.
• Packing Warehouses - is a facility used to pick, check, label and pack items prior to distribution.

Commercial and Industrial Factories

A factory or manufacturing plant is a structure usually consisting of pieces of machinery that workers operate to manufacture goods.

Most factories have their own warehouse facilities where they can store heavy machinery and finished items. These structures are usually located in areas that have large spaces, close to the economic centers and where access to
transportation is available.

Cambodia’s Industrial Sector

The two largest industries currently contributing to Cambodia’s economy is textiles and tourism. Agriculture is the 3rd largest sector that is the primary source of income for most locals in rural areas.

Most common industries in the country are mining, garments, agriculture, construction, light manufacturing, and tourism. All sectors, except for tourism, requires warehouse and factory spaces.

• The manufacturing sector accounts for approximately 35% of the country’s economy. Factories are located mostly in special economic zones and warehouses are built in outskirts of the city centers where large spaces are available.
• The garment sector is also one of the key components that contribute to the nation’s budget. In 2017, it employed approximately 635,000 workers, 90% of whom are female, in 643 factories around the country.
• Agriculture accounts for approximately 26% of the country’s economy. Crops are grown in rural areas and transported to large warehouses near the markets to allow ease of distribution.
• Construction and Real Estate experienced an exponential boom in the last decade. The need to house large quantities of building materials and large equipment also gave rise to the demand for warehouses near the economic centers.

Warehouse versus Factory Spaces

Although the 2 real estate properties are correlated and used by the same business sectors, the type of space you need to acquire depends on the specific purpose.

• A warehouse is needed to store finished products while factories are used to create or manufacture the goods.
• Factories can be located in provinces or areas a bit far from the city center where workers are in large supply. Warehouses need to be in the outskirts of the city where transportation and ease of distribution are guaranteed.
• Both structures need large spaces for heavy equipment and storage facilities.

There is a large supply of these types of structures in the Sihanoukville, Phnom Penh, Siem Reap and the provinces. The manufacturing and industrial sector in Cambodia is booming. With the low cost of these industrial buildings and
the large supply of workers, investors will not have a hard time setting up a business in the country.