Helpful Tips for Leasing or Selling Warehouse Space
This post originally appeared on tBL member blog SVN Southland Commercial Blog and is republished with permission. Find out how to syndicate your content with theBrokerList.
Warehouses are a very common type of property you will come across in the commercial real estate industry. When thinking about whether or not to move into a warehouse, there are a few things you will want to take into consideration. You want to be aware of your future needs, you want to consider the choice between buying a warehouse versus leasing a warehouse, and you want to identify an advisor who can help you wade through the negotiations and logistics of what you need.
Off the top of your head, do a quick brainstorm and decide on what you need for your warehouse space. For example, many warehouses will have loading docks. This is very important to be aware of if you intend to store goods that need to be transported by freight. That’s just one example of what you might come up with while brainstorming. My suggestion is that you literally sit down, take a piece of paper and actually make a warehouse wishlist. Then, when you look for your warehouse space, you will be able to match your available warehouse options against your list of needs and see how well it holds up.
This is another important factor to think about. To buy or to lease, that’s the question. So, there are a few things to keep in mind for this point.
How much will you grow? Do you anticipate doubling your inventory in the next 12 months? You probably won’t want to find a good warehouse location, get everything settled in, and then discover you are going to out-grow the warehouse in a few months. Find something large enough to accommodate your growth. It’s easier to find something a little too big, and grow into it, than it is to find a completely different warehouse to move into.
How long will you need a warehouse? There are so many industries out there. It’s possible that you are in a situation where you won’t need warehouse space for more than two or three years. If that’s the case, again, leasing may be a better option. However, if you plan on sticking around in the area for a significant amount of time, buying is probably a smart thing for you to do.
How much capital do you have? Can you afford to pay a down payment on warehouse space? This could be a big factor, especially for newer businesses. If you can’t afford the down payment, and you don’t want to take out a loan to cover the down payment, then perhaps leasing would be a good choice. It’s possible that at a later time, you may be able to convince the landlord to sell his space to you. You never know. But if you can’t afford to make a purchase, then go with the leasing option.
Are you thinking about becoming an investor? Plenty of people will actually purchase a warehouse, not because they need to use the space, but rather, because they wish to lease out the space. It’s very common in the industrial world for investors to purchase warehouse space and then lease it out. If that’s your end-goal, then obviously you would want to buy your own investment warehouse. That’s a no-brainer.
It will be very beneficial if you can know what to look for and expect when buying or leasing a warehouse. One of the smartest things you can do is talk to an advisor who truly knows the ins and outs of warehouse real estate. They can listen to your business goals, and help provide council on real estate challenges that you may be faced with you. They can help you troubleshoot your warehouse needs before the become an issue and they can help you avoid mistakes that could potentially turn into serious problems down the road.
Here’s a quick review for you, in case you’re looking for warehouse space. First, identify your needs. For example, will you need a loading dock? Make a list of these needs so you know what type of space your looking for. Second, decide whether you want to lease warehouse space, or if it’s better to buy a warehouse. Third, make sure to talk with an experienced advisor who can help you make the best possible decisions when identifying your ideal warehouse location.