Should You Rent or Lease a Warehouse?

E-Commerce Based Businesses are Growing

With the growth of online sales increasing every year, the amount of occupied distribution and warehouse space has increased by 86.2% since 2000. Consumers chose to shop online because it’s easier and they have access to quality products without having to physically visit a store. E-commerce is expected to grow at a compounded annual average rate of 10% over the next five years, creating tremendous opportunities for owners and developers of warehouse and distribution space. If your business is primarily e-commerce based, with no physical store location, you still need on on-hand inventory to push out in a timely manner. If the demand for your product is high, you should consider renting or leasing space for warehousing and distribution.

Commercial Leases and Commercial Warehousing

Sure you can buy a warehouse, but what if your business expands or relocates? Purchasing a building solidifies a warehousing and distribution location, but can make expansion or relocation a challenge. This can be problematic for smaller or newer businesses that are just getting started. Renting and leasing commercial property, however, isn’t as uncommon as you would think. Approximately 166,907 men and women in the U.S. work in the storage and warehouse leasing industry. The growth of the commercial leasing industry provides the opportunity to learn, explore and ask questions prior to renting warehouse space. Entering into an office lease agreement can allow you temporary space for growth if your business is expected to expand.

Finding a warehouse to rent depends on many factors. From pricing and space to location, renting a warehouse requires some research and planning. Working with a commercial real estate development company can prepare you to rent your business’s next warehousing and distribution location. To get started, Consider these tips before renting, leasing or purchasing a warehouse.

  1. How Much Warehouse Storage is Needed?
  2. Having a place to store your inventory is crucial to any business inside and outside the e-commerce world. Knowing exactly how much warehouse space you need will help you determine whether or not a location is for you. So, it is important to have an idea of what goes where and how many people, machines, and storage you’ll actually need.

  3. What are The Lease Terms?
  4. If you are familiar with commercial real estates then you know a bit of what it entails. If this is your first commercial real estate endeavor, you should pay close attention to the lease terms and clauses like the:
    Space Measurements
    Reimbursement Clauses
    Renewal Clauses
    Rent and Escalation Clauses
    Assignment and Subletting

  5. The Configuration of Warehouse Space
  6. Determining warehouse space needs should be a priority when looking for warehousing and distribution space for rent. You want to consider the amount of inventory you have (or will have), the positioning of equipment, the maximum occupancy and the “what goes where” again. Having a sketch or blueprint for your warehouse would also be beneficial. However, consider the lease terms, and if you’re renting, speak with the landlord before making any changes.

  7. How Much Are You Paying?
  8. The rents in warehouses are usually calculated on a per square foot basis, making the rent per cubic foot unique to warehouse space and very important. An increased size, even a small ten percent can change not just the storage space but also the rent. Calculating rent on a per-cube basis can give you a better comparison and understanding of how much space you’ll have and what you’re paying for it.

It doesn’t matter if you sell tee shirts, dog treats or shaving cream, you need a place to store it. If your business is based online, has a positive projected growth, but has no physical store, you should consider a space for warehousing and distribution. Commercial warehousing is also an option to consider if you need something long or short-term but not permanent. This provides you with the space you need but the freedom to relocate.

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