10 Considerations to Find Your Perfect Industrial Space

Selecting the right warehouse location is a game-changer for your business. It impacts everything from operational efficiency to long-term success.

Whether you’re setting up a distribution center, manufacturing hub, or logistics facility, making the right choice is crucial. Read on to discover the key factors that will guide your decision, backed by expert insights and data, to ensure your warehouse supports both your current needs and future growth.

Here’s what you need to consider:

• Proximity to Suppliers and Customers: Transportation costs are your biggest expense, but that's not all... read on. 
• Access to Infrastructure: The importance of transportation and local amenities
• Cost Efficiency: How rent and additional expenses will impact your bottom line
• Compliance and Safety: Ensuring legal and regulatory alignment
• Room for Future Growth: How the location can adapt to your evolving needs

And much more... let's dive in. 

1. Proximity to Suppliers and Customers

Strategic location is paramount. Being close to both suppliers and customers in today's day and age, is critical to speed up delivery and cutting your transportation costs. Beyond that, it can be the key factor in remaining competitive. If your competition can get it there in two days versus a week, you lose. 

According to a 2023 report by Statista, proximity to markets and customers remains the most critical factor in warehouse location selection, particularly in regions with high competition for supply chain efficiency. For businesses that rely on just-in-time inventory systems or same-day delivery there is no other option than being situated near suppliers and customers.

“The closer your warehouse is to key customers and suppliers, the less time and money you’ll spend on transportation logistics,” says Logistics Management.

2. Access to Transportation Networks

With this goal, seamless connectivity to transportation hubs—such as highways, railroads, ports, and airports—is essential.

A recent survey by Conveyco highlights that access to transportation routes is crucial for minimizing delays and keeping costs under control. When selecting a warehouse location, evaluating proximity to key highways, rail lines, and even ports (for international shipments) can reduce logistical costs and improve lead times.

According to the Conveyco report, companies that strategically choose warehouse locations near transportation hubs save up to 20% in transportation costs annually.

3. Workforce Availability and Labor Costs

A skilled and readily available workforce is vital for smooth operations.

Cities with a growing labor pool, particularly in logistics and manufacturing, are highly attractive for businesses considering warehouse location choices.

However, lower labor costs don’t always translate to better locations—considering factors such as wage levels, worker skillsets, and union presence is equally important.

Similarly, the average cost of living influences labor costs.

As wages are often directly correlated with the cost of living in an area, it is crucial to assess the economic climate of the region. For example, while labor costs in metropolitan areas tend to be higher, these regions also offer a larger pool of skilled workers. In contrast, suburban and rural areas may have lower wages but could present challenges in worker availability.

“Labor cost strategies must balance wage rates with labor availability. Always consider the long-term implications of selecting an area with high living costs,” advises Cyzerg.

4. Real Estate Costs and Availability

While cost is a significant factor, it's essential to consider hidden expenses.

Real estate prices, including rental rates and land costs, can vary greatly depending on the location.

According to Costar, average warehouse rental rates in key U.S. markets range from $5.50 to $20 per square foot, depending on proximity to major cities.

While low-cost regions may initially seem attractive, high-quality infrastructure and proximity to key markets often outweigh cheaper locations in the long term. This is especially true if operational efficiency is compromised.

Lower rent often comes with trade-offs, such as properties located further from major highways, ports, or customer hubs.

This can result in increased shipping expenses due to longer delivery times, higher fuel costs, and labor inefficiencies. And when shipping expenses often represent the most significant portion of industrial portfolio management costs, overlooking these factors can negate any short-term savings on rent. It's crucial to evaluate the total cost impact when selecting a property

5. Local Infrastructure

In this pursuit, local infrastructure can make or break your warehouse operations.

Well-maintained roads and easy access to distribution hubs or refueling centers keep your supply chain moving efficiently. Reliable utilities—water, power, waste management—aren’t just nice to have; they’re essential for keeping operations running smoothly. Energy-efficient systems and strong transportation networks don’t just reduce downtime—they slash long-term costs and boost sustainability. When it comes to choosing a property, infrastructure isn’t a detail; it’s a dealbreaker.

Similarly, consider other elements like average traffic congestion. For example, being located in high-traffic cities like Atlanta can delay deliveries while increasing fuel costs.

Floship advises considering factors like accessibility to highways, average traffic speed, and peak hours when selecting a warehouse location.

6. Environmental Risks and Natural Disaster Exposure

In terms of location, environmental risks should never be an afterthought when choosing a warehouse. Proximity to flood zones, earthquake-prone areas, or other hazard zones can lead to serious operational disruptions, inventory damage, and safety concerns for employees.

Mitigation measures like flood barriers or seismic reinforcements are essential to minimize risk. Warehouses exposed to natural disasters face not only downtime but also long-term financial repercussions. Factoring in these risks upfront ensures a more resilient and reliable operation.

7. Taxation and Financial Incentives

Tax rates and financial incentives play a huge role in determining the cost-effectiveness of a warehouse location. States and municipalities often offer perks like property tax reductions or grants to attract businesses, creating opportunities for tenants to negotiate favorable terms.

Just as landlords compete for top tenants, cities and regions are eager to secure credit-worthy companies willing to expand in their area. And the packages can be substantial.

For example, according to a 2023 industry study, financial incentives in regions like Texas and Nevada can lower operating costs by as much as 10%, making them increasingly popular locations for warehouse expansion.

The right tax climate can significantly enhance the feasibility of your chosen site, so don’t overlook this critical factor.

8. Future Expansion Possibilities

Planning for growth is vital. As your business expands, you’ll need the ability to scale operations quickly.

Because it’s not just about current capacity—it’s about future potential. Consider nearby land availability, zoning regulations, and emerging market trends that could impact the demand for space in the coming years. Failing to plan for future expansion could limit your ability to grow, so always prioritize flexibility and scalability in your real estate decisions.

Similarly, it's crucial to ensure that your warehouse can scale operations effectively. This means considering evolving factors from the demands of modern facilities. This includes access to power, infrastructure for AI, space for autonomous vehicles, and even the potential for drone use as part of modern technological advancements.

9. Foreign Trade Zone Status (FTZ)

For businesses involved in international trade, FTZs offer significant benefits. Being located within a
Foreign Trade Zone can reduce or eliminate customs duties and taxes for imports and exports, providing a competitive advantage. Many U.S. ports and airports, including those in California and New York, are designated FTZs, which offer significant advantages for global operations.

10. Local Laws and Regulations 

Compliance with local laws and regulations is a non-negotiable factor in selecting a warehouse. Ensuring that the warehouse meets local zoning requirements, safety codes, and environmental regulations is essential to maintaining smooth operations and avoiding costly legal issues. Proper safety training and adherence to regulations help safeguard both employees and customers, creating a secure and legally compliant environment.

Failure to meet regulatory requirements can lead to serious consequences, including legal liabilities and damage to your business reputation.

Tailor Your Warehouse Search to Your Needs

While these factors serve as a general guideline, the best warehouse location for your business depends on your specific needs, operational goals, and long-term strategies. By carefully evaluating each of these factors and staying updated on trends you can make a decision that not only supports your current operations but sets the stage for sustainable growth and success.

For a more in-depth exploration of the factors that should drive your industrial search, check out this exclusive checklist for tenants.