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  • Writer's pictureTom Miller, CCIM

The Finer Points of Leasing or Buying a Warehouse

Many warehouse users think of their real estate needs in terms of “price per pound.” In other words, how much per square foot are they asking? And while this certainly is a valid means of looking at your costs, there are nuances to the warehouse leasing process that are worth being considered. As time marches on and technology moves ahead, the warehouse of your past is not the warehouse of the present or the future. If you’re thinking, sure, the newest warehouse inventories do look smarter in general, but it’s still a warehouse, this post is worth reading.

Developers today are using new approaches to the warehouse product in terms of project planning, design and utility. When it comes to planning, projects are being developed with logistical advances in mind. Since no one is completely certain about where the next great logistical advances will be made, project flexibility is paramount. No one wants to have a seven-year-old warehouse that is functionally obsolete, meaning today’s projects are being designed for maximum flexibility. This results in a number of upgrades that are becoming standard for today’s cutting-edge projects:

• Large trailer and chassis storage courts • Long, wide truck dock courts • The maximum number of docks • Crossdocking • Eave heights of up to 40’ • The highest level of fire sprinkler ratings • Te most bandwidth capacity possible

In terms of the projects themselves, and in addition to the many features listed above, developers are now achieving LEED Silver status as a matter of course with occasional attempts at Gold status. LEED certification, whatever its other shortcomings, does result in producing some of the most energy efficient warehouses we’ve ever had to offer for general public use.

It is nuances like these – whether a building is LEED certified, how it might flex to accommodate a business’ needs today and in ten years, even the age of a building (unless it is very, very old) – that make up questions I very rarely hear. In addition to pricing and terms, these are valuable questions for potential tenants or buyers. Most users fail to understand that there is real added value in shopping for one of the latest designs available. While you may not need these super high weave heights today, is it possible that your operations might need it in the future? The same logic holds true for those trailer courts, big dock courts, the crossdock configuration, and the other benefits of the latest and greatest warehouses of today. Is it possible that if someone was looking at buying your business, a prime location in one of the new, most advanced facilities is a huge selling feature simply due to its potential flexibility and growth? And there is no arguing that a LEED status – which provides a large tax savings – results in lower NNN fees charged to the tenant, lowering your fixed operating cost. The latest technology in lighting, the LED fixture with motion sensors, the high efficiency heating systems, the wall insulation, it all provides significantly lower operating costs to the warehouse user.

So the next time you are looking for warehouse space, take the time to ask your real estate professional about what is available in the market and ask specifically about any pricing upgrade into those top Class A spaces. You might surprise him with your understanding, and you might be very surprised yourself with the answers. Certainly, you’ll be very pleased to be operating from the very best facility on offer today.

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Miller Industrial Properties, Sparks, Reno, Nevada
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