In this article, you'll discover:
- Key specifications to consider when searching for a warehouse, including size, layout, and ceiling height.
- How to evaluate base rent and additional costs to ensure you get the best value.
- The impact of a building’s age on potential renovation needs and overall costs.
- Essential factors in location selection, including accessibility and proximity to transport networks.
- Important considerations for warehouse lighting to ensure safety and efficiency.
The industrial market is hot. With so many tenants looking to scoop up that perfect warehouse, it’s easy to feel pressure during the property search. And when warehouses have the lowest vacancy rate among the commercial property types, you can’t risk going in unprepared.
So, while the list below is by no means exhaustive. It should give you, as the corporate tenant, some starter considerations to ensure that a property meets the building specifications you need. Read on to learn.
Does the Shoe Fit? Finding the Right Size Warehouse
We know folks, sometimes the first step is the obvious one. In this case, you should only be looking at warehouses that provide sufficient room for storage and operations. This step considers:
- How much square footage you need for product storage?
- How much square footage will you need in the future?
- How much space do you need for common areas?
- Bathrooms
- Offices
- Break rooms, etc.
Beyond floorspace required though, a warehouse must provide adequate cubic storage. So, consider the ceiling's height. Does the under-steel ceiling height provide enough room for proper racking storage systems?
The size of the footprint must make efficient use of your racking. Proper racking is the backbone of an efficient warehouse. Not only does it need enough height to maximize storage, but it must work within the existing floor plan to optimize the existing space. This means considering factors including the depth of the rack, flue spacing, and aisle width. Know that 50% of the market utilizes 64" pallets.
Then you need to deal with aisle width. A 54' column spacing allows for a 10' aisle with 48" racking. When this spacing increases to 60' between each column, the aisles widen from 10' to 12', creating wasted space. So, never lose sight on how your property is stored in your warehouse. It will have huge implications on making the best use of your square footage.
What is the Base Rent?
What do you do when shopping around? You see something you like, make sure the size works... then what? Check the price.
When it comes to warehouses, what is the base rent for a particular property? How does it compare to others within this region? How do base rents in this region compare to other parts of the country? Maybe you eventually find that it makes sense to open your prospective geographic net to another state. Learn the Top 5 Cities for Your Commercial Real Estate.
These are all points to consider. Especially so, because when it comes to the total cost of occupancy, it’s never just base rent. There are numerous other considerations that may be added to your Cap Ex (capital expenditures).
So, when we’re dealing with base rent, you want to make sure you get the most bang for your buck because there will undoubtedly be additional costs elsewhere. Remember, to put into the overall cost of occupancy factors such as:
Expect CAM charges, rent escalations, property taxes, utilities, service contracts
and even unexpected out-of-pocket costs to be piled on. So, don't leave your costs to chance. Learn how to find the optimal warehouse for the best price in the free course below.
What is the Building’s Age?
You know the old saying- never ask a warehouse her age? Yeah, neither do we.
The building’s age is one of the first factors you should absolutely be clear on, especially if you want to stay there a while. Why? It will clue you in on the estimated lifespan, possible renovations needed, and implicate almost every other way the building functions.
The age of your building will also clue you in on any potential risks it may be accompanied by. For instance, what is the roof’s age? You never want to leave yourself vulnerable to a leaking or old roof. So, be to get a clear answer from your property owner on the roof’s age and/ or when it was last renovated. The other key factor is the age of your HVAC systems.
Your warehouse’s age can also act as a key leveraging factor in negotiations. There’s currently a demand for highly functional modern facilities. This means warehouses that support ramped-up, efficient production that also make effective use of technology and sustainability.
Older buildings likely can’t supply these promises to the same level or will likely need renovations to compete. So, while you may save in base rent with an older facility, you’re looking at a potentially higher cost (and longer road) to renovate your warehouse.
Obviously, the other factor worth mentioning is that you’re landlord may agree to cover (some of) the cost of construction in your Tenant improvement Allowance. This is especially true if the features to be built have a usable life beyond your stay. To learn more about Tenant Improvement Allowance and negotiating the maximum package check out this article: What is a Tenant Improvement Allowance?
Location, Location, Location
Location is always a critical factor when it comes to your commercial real estate. However, when your operations rely on efficient transportation, the location concern becomes even more paramount. So, think long and hard about what spot makes the most sense for your manufacturing facility.
Not only should the property make ease of ingress and egress, but it should also be centrally located. Your warehouse should be close to major highways, roads, airports, cargo ports, rail networks, etc. Accessibility is key, especially since delivery expectations keep growing quicker.
There are other specifics you can’t get wrong when it comes to your facilities. Carefully examine the loading dock to ensure that your trucks can pull up properly and that your shipments can be loaded and unloaded with ease. Also take into consideration how easy it is to maneuver large vehicles in the parking lot and driveway areas and how accessible the warehouse location is from major highways. You want to make sure you have at least 135 feet of marshalling room.
The location you want to balance convenience with price. For example, right now, Tennessee is in that perfect sweet spot all manufacturers want. If you are in Knoxville, you are within a singular day’s drive to three-fourths of the U.S. population. Still. it averages an extremely affordable asking prices for base rents.
Putting The Spotlight on Lighting
Who turned out the lights?
A split second of faulty lighting in a warehouse can have lethal consequences. Like a lot of other factors on this list, the topic isn’t exciting until you get it wrong. So, don’t.
Lighting ensures that employees can work safely and efficiently. When it comes to warehouse lighting, there’s three most common types:
- Fluorescent
- High Intensity Discharge
- LED
Fluorescent lighting is one of the most common types of warehouse lighting. Its low cost and long-life span make it a popular choice for warehouses. Fluorescent lights come in several varieties, including Standard (T8), High Output (T5HO), and Super High Output (T5SHO). These fixtures are relatively easy to install and maintain and provide a good overall light level for warehouses. However, their functionality may be negatively affected in extremely hot or cold temperatures.
High Intensity Discharge (HID) lighting is a more conventional option for warehouse lighting. While it is still common, it’s popularity has faded in recent years-much like its quick lumen depreciation rate. (Sorry!)
While HID lighting is the most cost-efficient, it requires the most energy. They also demand a warmup time before turning on. HID lighting comes in several varieties, including Metal Halide, High Pressure Sodium, and Low-Pressure Sodium.
LED lighting is a relatively newer kind of warehouse lighting. LEDs provide significantly higher efficiency than other types of lighting, while also offering superior longevity and controllability. LED lights are expected to last up to 100,000 life hours. LED fixtures come in several varieties, including linear tubes, high bay fixtures, and area lighting. LEDs are an ideal choice for warehouse spaces, as they provide a bright light source while using less energy than other types of lighting.
The right option will differ depending on your warehouse, business, and its needs. But, despite which you select, you still need to provide sufficient brightness. This demands having enough foot-candles of light and then ensuring it is within the optimal color temperature.
Choosing the Right Warehouse
When it comes to choosing a warehouse for your business, there are obviously many things you need to take into consideration. But to be honest, this list is only the tip of the iceberg. Have you considered the flooring yet? Because if the floor’s thickness can’t withstand the weight of your inventory, what do you think is going to happen?
What about security- have you thought about whether you’ll hire guards, upgrade your CCTV system, and refurbish the gates?
The point is that before you can select the right warehouse, you need to know what you’re looking for. The list of factors seems endless, from proper ceiling heights and durable floors, to dock doors and HVAC. So, don't lose track. Learn the 70+ points you need to consider to find your optimal warehouse.
The True Tenant Reps™ at iOptimize Realty® are experts in identifying and conducting due diligence for optimal warehouse properties. We have 30+ years of experience finding the best warehouses for the best price. Now, we want to share the tips and tricks we've developed to empower corporate tenants. We poured our industrial real estate due diligence into the free course below, where you’ll learn to be prepared with the following features:
- Size and layout of the warehouse
- Keeping an eye on your CapEx
- Finding the right storage acres
- The proper roofing and ceiling height
- Your warehouse’s sprinkler system
- The construction materials used
- The building’s HVAC system
- Creating the right office within the warehouse
- Maintaining safety in your warehouse
- Finding the right dock doors
- And so on, trust us there’s a lot you should know
You'll also receive a checklist of the 70+ factors you need to consider when touring a warehouse. Click below to enroll.
By watching the free video course you’ll be empowered to define your needs, consider the locations, and compare prices between different warehouses. But you don't have to do it alone, and nor should you.
Tenant representatives are essential to negotiating the best warehouse lease for corporate tenants. Having a knowledgeable tenant rep on your side can help ensure that you get the most value for your money when it comes to a new warehouse. They understand the ins and outs of the leasing process, including what it takes to get an optimal lease and how to negotiate terms. The True Tenant Reps™ at iOptimize Realty® regularly save our corporate clients 30% of their CRE spending and 90% of the time involved.
Talk to a Tenant Rep today to learn how they can help you find the right warehouse.
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