When looking for a warehouse space, being strategic is critical. The choice can mean more profits, productivity, and efficiency––or less. The goal is to choose a space that is most effective for your business, making it competitive. Here are my top five things to consider when assessing your current space or looking for a new one:
1. Location, location, location. As with any real estate deal, location is important. The right warehouse location is determined by so many factors, I need a whole blog to cover it. Read Part II, How to Pick the Right Warehouse Location.
2. Capabilities. To understand warehouse capabilities, know your plan to receive, track, store, pick, pack, and ship. Then make sure the space is equipped to match needed functions––beyond wiring, connectivity, age of roofing, and size of loading docks. For example, does the warehouse allow for cross docking? Is the storage heated, cold, or room for both? Is there a forklift operator onsite? These are all things CEG Investments has been tackling at Ridgewood Industrial Park. We're adding 13,000 SF of heated warehouse to meet growing demand. So if you find a warehouse space that works with the rest of your needs, your broker could address what’s lacking in negotiations. Keep in mind if heat is not required, a tenant can save thousands on lease rates and utilities.
3. Lease terms. Most warehouse lease terms range from three to five years, although short term leasing can also be found. It’s in the owner’s best interest to keep tenants as long as possible. On the flip side, a tenant could see reduced rent with a longer commitment. And moving can be disruptive for the business and its supply chain. Longer term leases may mean parties agree to other concessions like rights of first refusal and improvement allowances. Either way, a good tenant/owner relationship is key. Your broker can help set the tone.
4. Security. It’s beneficial for both the owner and tenant to know a property is safe. Tenants want a safe warehouse to store goods and equipment and to be a positive workplace for their employees. On the owner’s side, securing the property––and having knowledge of what happens on the property––protects their financial investment and reputation.
5. Size. I left this for last, as it is the most obvious. However, getting the perfect size with the right docks, drive-ins, and clear height might require creativity. There’s a shortage of small to mid-sized warehouse spaces in the Twin Cities. That’s why moving north along the I-94 corridor is so popular. Even then, it may require you to one, think realistically about how much space you need, and two, consider getting into a shared space situation. For example, at Ridgewood we have multiple businesses sharing one warehouse building. Each have their own bay, dock, drive-in, storage, etc. They all can take advantage of a benefits of an industrial park, while having the flexibility to take on only the size needed.
As a tenant, finding a warehouse space to fit your needs is important. As an owner, finding the right tenant is also important. Brokers work to find the right deal for both. At CEG, we’re here to help! Email our team at hello@cegspaces.com or call 612-788-1552 if you have any questions. You can find me at 612-428-3333 or jeff@cegspaces.com.
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Jeff Salzbrun is the owner/broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in thousands of sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.
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