With the rise in popularity of commercial sites like office and retail, warehouses were once forgotten. But, with an increase in sales year over year, rising up to $491 billion in 2017, this industrial asset has made a great comeback. According to a report by the Urban Land Institute, industrial properties such as warehouses are the top commercial properties for development and investment. The colossal rise in the e-commerce business is the main contributor to the trend. E-commerce companies like Amazon are responsible for 40% of the industrial property leases. Because of the high demand, operational warehouses are becoming deficient and the rental rates are shooting up to the sky. In this time, investing in a warehouse means putting in a great amount of money. So before one decides to do so, they need to be sure what are the things they should and should not do when making an investment in a warehouse. Here are a few things that can be helpful.
Don’t Underestimate the Value of a Warehouse Space
The value of a warehouse space matters a lot when it comes to making an investment. The value is measured based on different circumstances like the location, size, and what use you are going to make with space. The best way of calculating the value is to start by comparing the warehouse property’s worth with other similar warehouses in the same area or city. Most warehouse spaces are valued by the square foot, so make sure to get the measurements of the entire space so you know the exact figures. You can then contact local brokers or other warehouse owners to inquire about the average price per square foot. Once you are clear on the cost, you should then determine the condition of the place. See how old it is, if it comes with any specialized equipment, what types of forklifts can it have onboard, and whether it is secure? All these things have an effect on the value of your warehouse space.
Don’t Overlook the Location of the Warehouse
Choosing an ideal location for your warehouse space has to do a lot with the types and delivery timeframe of the products you offer. For example, for an e-commerce company, it is important for them to have their warehouse located near transposition areas, like the highway, airports, and seaports, so they can ship out their products as quickly as possible. Did you know that the expense of bringing products in and shipping them out makes up for 60% of the company’s costs? That is why choosing the correct location is crucial in this business. Similarly, distribution companies need to select a warehouse location near large population centers because that is where they can find more and more trucks, as their business depends on them for delivering the cross country. But, remember that not all largely populated centers are considered an ideal location, because of the high prices and increased traffic. Don’t let all this overwhelm you, because no matter where you are located, you will be able to find a good warehouse space to invest in.
Do Consider the Height of the Warehouse
When it comes to choosing the right warehouse, the height of the space plays an important role. The height of the warehouse is commonly known as the clear height, it specifies the distance between the floor and the clear ceiling. The most common clear height of warehouses these days is 30 to 32 feet. You need to decide what height suits you the best depending on the kind of work you will be doing there. For example, if you are going to be stacking large piles of boxes, then you need to look for tall height. On the contrary, if most of your work is going to be done on the floor level, then you do not require a very tall height warehouse.
Do Think About Office Space
Whether it is a warehouse or any industrial area, one needs an office space. This space can be used for different purposes like for the owner to just sit in and work, for piling up documents, for meeting prospective clients, etc. Generally one does need more than 5-10% of the total square foot space to set up a decent office. When looking at a warehouse, see if it includes an office space or not, if there is one then see if it is of the right size. If there isn’t any office space, it means you would have to separately spend money to make one.
Do Consider the Layout of the Warehouse
If you want to invest in a warehouse that increases efficiency, consider the layout of your warehouse space. If you have a vertically spaced warehouse space, you can utilize that to your advantage and make the maximum use of the space. For example, the vertical space above work areas, docks, cross aisles, etc can be used, if it does not have any safety risk. You can apply the 80/20 principle here, this rule determines that 80% of the sales come from 20% of the products, so you can customize the layout of your warehouse based on this rule. The product that sells the most should be kept closer to the packaging area, this will increase the order fulfillment speed and will also save time. Similarly, the products that are most frequently ordered can be placed closer to each other, so it’s quicker to access them.
Don’t Rush Into Making a Purchase
Bringing your emotions while making a purchase can negatively affect your investment. Do not let your excitement or empathy for a place let you make the decision. No matter how fancy a place looks, or no matter, if it is located in a prime location, rushing into making a decision, is a big no. There is no need to rush into making this big of an investment, take your time in finding the perfect space, and perfect location for your warehouse. This might take up your time, but in the long run, it is only going to be beneficial.