How Much Does It Cost To
In recent decades, cross-border and e-commerce trade has resulted in a boom in the need for warehouse space.
Whether you need a small storage area or a large industrial warehouse for logistics, warehouses today come in all shapes and sizes with the latest technology and amenities.
However, depending on the space, amenities and other factors, the cost may vary by a huge margin. Also, it is not easy to calculate the estimated warehouse costs due to a number of factors influencing the decision.
Are you a business looking to rent a warehouse but unsure of how much it costs to rent a warehouse?
So, to make this decision-making easier for you,Prime Associates explains all the concerns associated with the cost of renting a warehouse in this detailed guide.
With businesses expanding and thriving, the need for warehouses has also increased tremendously. However, you cannot go on buying warehouses at every location. Unless you are as giant as Amazon, it’s just impossible(FYI- Amazon also operates via rented warehouses!).
“Rather than buying a warehouse, renting the space is a more convenient option for companies to carry out logistics activities.”
Leasing a warehouse space comes with numerous facilities and multiple advantages like flexibility, less tied-up capital, tax benefits, and more. If you are interested to know in detail, browse through our blog- Why renting a warehouse is a better option than buying a new one.
When you are going spree to find the perfect warehouse for rent, comparing different properties and looking at various amenities, ensure you ask to clear some terms with the owner beforehand. Before making any decisions make the following things cleared out:
Who would be responsible for paying for maintenance and repairs?
What equipment is included in the service, and who would be responsible for its maintenance and repairs? (especially for HVAC units)
What would be the estimated annual running costs?
For how much area do I need to pay? Does it include a common area or not?
What would be the minimum lease?
Is the landlord willing to pay for the improvements made by tenants?
Having answers to all these questions beforehand is necessary to negotiate better.
Calculating warehouse costs is a hectic task there are several each warehouse as different operational cost it depends on type of warehouse, equipment, no. of employees, etc. here are some of the factors affecting warehouse costs:
As per the name, the warehouse rent is decided based on how much area you require to run your logistic operations. So, the smaller the warehouse, the lesser the rent will be.
The minimum rate you pay for the space you occupy. It varies according to the location and can charge from 10-100₹.
Prime Associates provides the warehouse for rent at prominent locations in Gujarat at affordable prices and is equipped with numerous amenities and services. Please have a look through our different sites to know more.
These are calculated to know the monthly or annual warehouse operating costs.
The estimated operating expenses include different amenities like water, electricity, janitorial and HVAC maintenance, and some terms like NNN (Net Net Net or Triple Net Lease) or CAM (Common Area Maintenance).
NNN or triple net lease includes every expense related to commercial property like property insurance, taxes, and other maintenance charges paid by tenants. These charges are quoted on sq. ft bases.
CAM or common area maintenance includes regular maintenance and repair costs. CAM is also based on sq. ft charges.
Often landlords charge NNN or CAM along with the base rental charges. The billing cycle can be monthly or on an annual basis.
NOTE: Before signing the lease agreement, thoroughly review each point and clarify all the things regarding payments beforehand.
Insurance is also an essential part of the overall expense. The warehouse owners have to make clear what type of insurance and how much insurance they are providing to the tenant. Make sure that the same amount of insurance is present on the contract paper.
Insurance varies according to the products you store, the equipment you own, the location of the warehouse, no. of employees you hired, and the value of the stock you are carrying.
On the basis of this, the tenant can get an estimate, which makes it easier to take out a budget for insurance expenses.
Now, the main question is how to calculate warehouse rental costs. As mentioned above the calculation of warehouse rental costs depends on three main criteria:
Floor area
Base rental
expenses
The billing cycle can be monthly or annually, it depends on the contract. Here we have given two examples to understand math better.
Monthly: Let’s see an example for calculating warehouse rental costs: For this example, suppose Area: 3000 sq. ft Base rental (as per the quotation): 10₹ sq. ft/month Estimated operating expenses (as per the quotation): 20₹ sq. ft/month So the formula is: area covered ✕ (base rental rate + estimated operating costs) = monthly rate So, the total monthly rent would be: 3000 ✕ (10 + 20) = 90,000 ₹ (These numbers are given as examples)
Annually: For this example, suppose Area: 3000 sq. ft Base rental (as per the quotation): 120₹ sq. ft/year Estimated operating expenses (as per the quotation): 240₹ sq. ft/year Now, applying the formula: area covered ✕ (base rental rate + estimated operating costs) = yearly rate 3000 ✕ (120+240) =3000 ✕ (400) =10,80,000 ₹ Total annual rent= 10,80,000₹ Total monthly rent= 10,80,000/12= 90,000₹
As we mentioned earlier, various reasons affect warehouse costs. One of them is location.
As per the reports on statista published by Shanglio Sun, for the first half of the financial year 2021, the average warehousing rate per sq. metre was highest in Pune, 248₹.
Followed by Chennai and Kolkata at 229₹ and 228₹ respectively. In contrast, the lowest average warehousing can be seen in the Ahmedabad district of Gujarat, which is 167₹.
While as per the report established by Knight Frank on the Indian warehousing market , Ahmedabad’s warehousing demand comes because of industrial and manufacturing segments.
Ahmedabad is home to one of the significant warehousing clusters. These clusters are Aslali-Kheda, Changodar-Bagodara, Sanand-Viramgam, and Chhatral-Kadi-Vithalapur-Becharaji belts.
Aslali-Kheda and Changodar-Bagodara are well-established clusters. Many companies like Johnson and Johnson, Amazon, Flipkart, and others have invested in renting a warehouse in the clusters, as mentioned earlier. Here you can find a warehouse with lower rental rates and a world-class facility.
Moreover, the excellent availability of roads and proximity to railways make transportation more accessible.
At the end of the day, calculating warehouse costs can be exhausting if you are unaware of its aspects. Hence it is important to acquaint yourself with the elements that determine the cost of a warehouse on rent.
We hope this article has clarified the main features you need to count warehouse costs.
If you have questions, feel free to contact us, our team will be glad to hear from you.
As a commercial space leasing company, Prime Associates has become a reliable name when it comes to high amenities and well-facilitated warehouses for rent in Gujarat, India. Our decades of experience have set a benchmark in offering modern-day logistics solutions for clients across industries.
Warehouses, industrial sheds, factory space, and built-to-suit facilities, Prime Associates offers it all. Take your business to new heights with us. To know more, visit our website or get in touch with us by filling up the form. Our team would be more than happy to guide you!
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