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  • Writer's pictureBeki Dobson, SIOR

Warehouse Classifications – What Fits Your Industrial Needs?

No matter which city you visit, spend enough time driving around you’ll likely find a warehouse. They’re large, plain buildings on the outskirts of our cities and towns with lots of trucks and roll-up doors. Despite these generic similarities, warehouse facilities can actually vary quite a lot from one to the next. If your business is a warehouse use, or has plans to be soon, a little education is in order. Understanding warehouse classifications, as well as the of nuances relating to location, flood planes, truck courts, etc., is a great first step.

Industrial properties are classified into A, B and C, with amenities, pricing, and location differing greatly in the different classes. The key to finding the best warehouse for your needs is zeroing in on the property that meets your needs – and nothing more – while also securing a competitive lease rate and tenant-favorable terms. That sounds tricky, but it isn’t if you’re partnering with the right team.

Here in the northern Nevada market, we have a large inventory ranging from Reno and Sparks to Fernley, down to Carson City, Dayton and Gardnerville. And yet, it’s likely that of the available warehouses, there is only one will suit the needs of your business. Locating it can be a challenge, but you’ll start from a better position if you have a strong grasp of the warehouse concept you need.

Warehouse Class “A”

This class of property has the highest base rents and OPEX costs. It also has all of the bells and whistles in terms of upgrades and technology. Warehouses of this class are also usually found in the most desirable areas and REIT owned and professionally

managed. These buildings generally offer the most advantageous amenities – the tallest ceiling heights (30’ and up), highest density fire sprinkler systems, largest column spacing, most spacious truck courts and most trailer parking spots, plus a very high dock count with cross docking.

Warehouse Class “B”

The B Class is more moderately priced for base rent and operating expenses than class A, along with some of the same amenities. Locations are often in town or in the older areas of Sparks and Reno. Property ownership is mixed with REITs, regional investment groups, and single investors, which means a few variables in terms of ownership and management

quality. Eave heights are typically 22-24’ and column spacing is often closer than class A. Fire sprinklers tend to be .33/3000 GPM, and ESFR is quite rare. The lighting may have been upgraded, but warehouse heating units will likely be older and less efficient. Truck courts are often shorter for class B properties, with partial street use required for access for 53’ trailers and fewer dock counts with front or rear loading only. Trailer parking spots are uncommon in Class B.

Warehouse Class “C”

Class C is made up of the lowest priced locations. Unfortunately, Class C is also made up of many warehouses that are functionally obsolete properties for modern logistical use.

However for the right tenant, that’s not a problem. These C class warehouses are best suited for manufacturing or assembly operations that do not require modern distribution features. Because these properties are not considered investment grade, they are rarely owned by Real Estate Investment Trusts (REITs). Instead, ownership of these properties is almost exclusively private investors and owners, and the property management occasionally can leave much to be desired.

Whether or not your business needs fall into class A properties or class C properties, a professional commercial real estate agent should consider your transaction of the utmost importance. If you find yourself feeling otherwise, remind yourself that your agent works for you, and you should enjoy prompt, professional, expert service from the beginning to the end of your work together. In Nevada, we invite you to contact Miller Industrial Properties for assistance in locating the right commercial property for your needs.

If you are still unsure of what type of property is best suited for your business, including the difference features that manufacturing, storage & distribution, and flex space provide, read Industrial Real Estate – What is It? before you begin your search.

Our posts are intended to educate commercial real estate users so they can make better decisions in their real estate use, investments, buying and selling. We encourage your input and commentary. If you are enjoying these posts and finding them useful, help spread the word via Facebook, Twitter, LinkedIn, Google + or email with the buttons above.

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Miller Industrial Properties, Sparks, Reno, Nevada
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