Meta: Are you planning to buy a warehouse and wondering how much does it cost to rent a warehouse? Here is how you calculate.
Warehouses are costly. I won’t lie to you about that. But truly, how much does it cost to rent a warehouse? There are no clear cut answer to this question. Various factor plays a vital role here.
Manufacturers must examine a variety of criteria, including the quantity of space required, the location of the warehouse, and how well it supports their business objectives – will the area be used solely to store safety stock or will it also serve as a fulfillment center?
External factors like as supply and demand, as well as changing company needs, have a significant impact on costs. Also knowing warehouse KPIs can also help to understand the entire rental process in a proper way.
In recent years, for example, e-commerce companies have chosen to construct smaller fulfillment facilities in order to serve clients in densely populated areas more rapidly. As a result, demand for smaller warehouse space has skyrocketed, with rental prices for buildings under 120,000 square feet rising twice as fast as those for larger warehouses.
Over the past few years, the stock has increased by 4.8 percent to $7.86, although the warehousing industry has suffered as a result of the coronavirus outbreak.
On top of all of these factors, the process of renting a warehouse is further complicated by landlords and brokers who frequently explain their pricing alternatives using cryptic acronyms rather than simple English.
Factors Affecting Warehouse Rental Prices
Three main criteria are used to calculate warehouse rental costs. They are as follows:
The floor space – This refers to the size of the warehouse a business is wanting to lease and is measured in square feet.
The base rental rate is usually expressed in dollars per square foot, such as $0.95 per square foot per month or $11.40 per square foot per year.
Estimated operating expenses (NNN or CAM) — Often expressed in dollars per square foot, such as $0.35 per month or $4.20 per year.
The acronym NNN stands for the triple net, sometimes known as a triple net lease. This refers to the additional fees a business renter must pay in addition to their regular rent, such as taxes, property taxes, insurance, and other maintenance costs. This is normally priced per square foot.
CAM is for common area maintenance, and it refers to the costs of upkeep that a landlord passes on to the tenant. This includes all fees associated with the business property’s management and upkeep.
Landlords of warehouse and industrial facilities will typically expect tenants to pay their basic rate + NNN or CAM. In addition to running costs, tenants must pay the warehouse’s electricity bill, which is typically around $2 per square foot per year.
Despite acronyms that appear to be designed to mislead renters, calculating warehouse expenses is not as complicated as it may appear at first. Three numbers are required to calculate your monthly or annual cost:
How to Find Out the Costs of Warehouse Storage
Let’s compute some monthly and yearly prices based on the average warehouse costs per square foot and average NNN/CAM charges now that you know what you’ll need to figure out warehouse storage costs. Let’s say you’re renting 5,000 square feet of space.
· Monthly rent: $.67 per square foot, annual rent: $8 per square foot
· NNN/CAM: $.33 per square foot per month, $4 per square foot per year NNN/CAM: $.33 per square foot per month, $4 per square foot per year
Calculation for the Month:
· 5,000 square feet of space is required.
· Monthly Rental Rate: $.67
· Monthly NNN/CAM Rate: $.33
