Tag Archives: how to procure warehouse space

How to Procure the Ideal Warehouse Space for your business

09 May

There are a number of steps and factors to take into consideration when looking for the ideal warehouse space to accommodate your space requirements. I always tell my clients to start with their ideal list of space needs, if you start off with less than ideal objectives then you will certainly end up with sub-par results. Begin the process with a thorough space planning exercise. A knowledgeable real estate broker can help you with this and supplement with an experienced architect and/or engineer to develop your space program as needed. One underlying question throughout this process is how will your company use its new space? For example, are you looking for maximum clear height to fully utilize cubic space or does lower ceiling height work? With high bay space, material handling equipment and heavy duty racking is needed so cost of this needs to be taken into account. Other requirements to consider:

  • Loading needs: What is the anticipated truck activity? Will full size tractor trailers be used and/or box size delivery vehicles and vans? If full size trailers are anticipated, then appropriate truck apron space is needed. This requires a minimum of 100 ft. of depth to allow for the trailer to back in. Is Drive in loading needed? If so, and interior garaging is required, then gas/water separator, ventilation and CO2 monitors will be required to meet fire, life/safety code. What is the anticipated volume of truck activity? How many loading doors are needed? This is important to insure the free movement of vehicles to minimize waiting and labor costs. Proper truck level heights and need for levelers should also be evaluated.
  • What is the product flow and ideal configuration? Rectangular works better than long and narrow.
  • Parking and outside space: Include your parking needs including auto and truck spaces in your list of requirements. Also is outside storage for trucks and/or product required? Note that not every municipality allows outside storage. Confirm local zoning ordinance for this type of use.
  • Quality of space: Class A modern or lower price Class B? Is image important? Headquarters quality or just plain functional?
  • Fire suppression: Is ESFR sprinkler system important or basic system? Wet or dry system? If you plan on not heating your space then dry system is needed. Note that sprinkler systems can be converted to the type of system that is required – at a cost. Also, very important is understanding the local municipal fire codes for sprinkler systems. Enforcement code for distance from sprinkler heads to top of racking varies from one town to another. In rack sprinkler may be required depending upon the nature of the product.
  • Floor load: What are the floor load requirements for stacking the product? Ceiling height and height of racking are important considerations. Testing of a core sample of the floor of the candidate property by a structural engineer may advisable.
  • Energy efficiency. Will you be heating and cooling the space? Understanding the R factor of a roof and how well walls are insulated should be investigated when evaluating properties.
  • Lighting: Sodium vapor and fluorescent lighting fixtures no longer meet code. Energy efficient fixtures such as T-8 or even T-5 lighting should be installed. Energy companies still offer rebate programs to install these.
  • Location: Perhaps the most important factor. Is the stem time to ship to your customers the primary concern? Commuting distance for your employees and future hires? Location will affect price as well as will quality of the space. In the Boston area, proximity to downtown has a direct correlation to price as does age, quality of the space and other factors such as ceiling height. Pricing for distribution space along Route 128 may be similar as space on Route 495 but higher quality/modern facilities with 30 ft. clear height, ample loading and parking and ESFR fire suppression systems are more prevalent along Route 495.
  • Cost: Budget for space is always an important factor. Besides base lease rate, have a full understanding of what costs are included and what are not included in the deal (see my 3/5/15 and 4/10/15 blog posts). An experienced commercial real estate broker can help you with this. A history of operating expenses should be obtained for candidate properties to understand costs involved with operating a property.
  • Special requirements. Does your business require other out of the ordinary type of requirements such as above spec power, storage of hazardous materials, etc. Also, determine amount and layout of office space required. Typical ratio of office to warehouse space found in distribution facilities is 5% of total building area. An experienced commercial real estate broker can advise your accordingly on these matters.

With the aforementioned ground work completed you and your broker will be prepared to commence searching for the ideal property.

While searching for properties, current market conditions should be taken into consideration to understand the challenges involved with finding the ideal space. Currently, national industrial vacancy levels are at a 30 year low and occupancy gains continue as e-commerce demand is absorbing space. Current trade policies may impact future vacancy rates as the Trump administration seeks to renegotiate or withdraw from NAFTA and has pulled out of the TPP. A knowledgeable commercial real estate broker that specializes in industrial space will understand current market conditions, trends, pricing and concessions being offered and be your advocate to help to negotiate the most advantageous deal on your behalf.

An experienced commercial real estate broker will also dig deeper and not rely on a simple Loopnet or Costar search for property but will have a distinct pulse on the market, the resources, relevant contacts and connections to conduct a thorough search to navigate the market and uncover ideal solutions. Further, the professional agent will continually look out for the client’s best interests throughout the negotiation and relocation processes.

Procuring the ideal warehouse space for your business is a multi-faceted and complicated process. Please contact me to review your specific space requirements and find the best solution to your specific commercial real estate requirements.

Warren Brown, President, Boston Commercial Properties, Inc.