Maximizing Your Investment: The Benefits of Renting Warehouse Space for Your Business

The good news? Business is off the charts. The bad? You’re running out of space for equipment, goods and staff.

Whether you’re a tech start-up with ten desks setting a course for fifty in a few short years or an e-commerce entrepreneur wondering if it’s time to expand and replan your fulfillment strategy for more profit, renting commercial real estate warehouse space could help you scale your operations and manage growth and inventory more efficiently.

The Benefits of Leasing Warehouse Space

Warehouses are an increasingly popular option for businesses of all types – from fitness clubs that want to add amenities like climbing walls, boxing rings or onsite cafes and apparel stores to their space to retailers looking to lessen supply chain woes or guard against shipping delays by bulking up on inventory in anticipation of seasonal peaks.

Their benefits include:

Size

One of the obvious benefits of leasing warehouse space is the increased work and storage space it offers. A single, large space eliminates the need for multiple off-site storage facilities and, if desired, could eventually centralize and house all of a company’s activities, from front-end office administration and sales to back-end manufacturing, showcasing and distribution. Small businesses can opt for spaces as small as 1,000 square feet, while large e-commerce retailers or film companies might elect to lease 50,000 square feet or more.

Ease of Access

Because warehouse space is typically located near major waterways, seaports, rail lines and highways, it allows easy access for receipt, transfer, distribution and even return of goods. When used as a product showroom or when it incorporates product repair and servicing, it can also improve customer experiences and satisfaction.

A Warehouse for Every Need

There are a myriad of different types of warehouses available for lease.

Typical types and uses include:

Public: This warehouse space is often government-owned, located near airports, railways and seaports, but can be leased for any business with short-term distribution needs. Public warehouses can be bare-bones storage spaces or provide other services such as physical inventory counts, inventory management and shipping functionality.

Private: Also known as proprietary stores or warehousing, private warehouses are an option for wholesalers, distributors and producers.

They typically provide:

• Storage
• Inventory management
• Cross docking (unloading materials from inbound transportation and loading them onto outbound carriers with no storage time in between)
• Kitting (gathering and combining a collection of goods or SKUs to create a new SKU, as in the case of monthly gift box or subscription box goodies)
• Pick, pack, and ship (fulfillment)

Smart Warehouses: Smart warehouses use robotics and advanced technology such as artificial intelligence to automate all processes, from inventory tracking to picking, packing and shipping, and operate with very little physical labour.

Distribution Centres: Distribution warehouses function as regional hubs within more widespread logistical networks. They allow companies to serve a specific district or area more efficiently, making their location paramount.

Climate-Controlled or Cold Storage: Climate-controlled warehouses allow users to control temperature, humidity or light for products such as food, electronic components or live plants. Cold storage warehouses supply cooling and refrigeration services.

Hazardous Material (HazMat): Hazardous materials – including flammable substances, corrosive materials, explosives, radioactive matter and infectious agents – require extra precautions. HazMat warehouses have the specialized personnel, insurance, fire suppression, safety systems and containment protocols needed to safely transport, store, relocate and secure various substances.

Research And Development (R&D) Centres: R&D centres are often the most specialized industrial warehouse space and depending on the products created and tested within them, they may need to comply with stringent environmental regulations.

Data Centres: Data centres typically house the large-scale IT systems and computer servers involved in cloud storage or complex computing operations such as mining cryptocurrency. Electrical efficiency, climate control and security protocols are the most important considerations when leasing these warehouse spaces.

Flex Space: Flex space warehouses are perfect for fast-growing, small to mid-size companies that produce tangible products and want to scale their businesses as efficiently as possible by bundling office, storage space, showrooms, etc., under one roof.

Flexible Lease Terms

Flexible lease terms, including month-to-month contracts, allow businesses to upsize and downsize their operations and manage inventory in anticipation of or response to seasonal fluctuations or sudden increases or decreases in product demand.

Improved Logistics

The faster you get your products to your customers, the happier they’ll be. Depending on the nature of your business, you may require a large warehouse with high ceilings, sturdy loading docks or specialized storage solutions. Because you can tailor warehouse space to your business needs, you can create a customized system that reduces the time and labour required to manage incoming and outgoing shipments.

Cost savings

When you lease warehouse space, you avoid the sizeable capital expenditures of buying a warehouse outright. Instead of paying mortgage and renovation costs, you can invest in product development, technology, marketing and human resources.

Unlike other types of commercial real estate, landlords are usually responsible for the building maintenance and repair costs of their warehouse space. Without worrying about maintaining HVAC systems, repairing loading docks, resurfacing parking lots and replacing lighting, you can focus on your customers and your core business.

Improved Security

Warehouses store valuable assets, making them a target for both external and internal theft. Because warehouse security is crucial to maintaining brand reputation and warehouse occupancy rates, most landlords invest in comprehensive systems, including security cameras, access control systems, alarm and intercom systems, perimeter and parking lot security and often guard services as well. The best will also utilize digital warehouse management systems to track inventory in real-time.

Disadvantages of Leasing Warehouse Space

Lack of Asset Appreciation

Unlike purchasing a warehouse space, leasing one does not allow your company to reap the rewards that come from asset appreciation.

Lack of Control

When supply chains stutter or market fluctuations happen, businesses must respond quickly. Depending on the terms of your lease agreement, your company could find itself unable to modify your warehouse space or make operational changes without incurring significant delays as lawyers debate whether they’re allowed under your lease agreement. As a result, you could miss out on opportunities or watch your bottom line take a big hit.

Long-Term Costs

If you lease warehouse space for an extended period of time, you could lose the benefits of the lower upfront costs and reduced overhead and end up paying more in rent and other expenses than it would’ve cost to own the warehouse space outright.

Co-warehousing: A Middle Option Before Committing to Bigger Things

Co-warehousing is a collaborative approach where multiple businesses share a warehouse space and attendant resources. This arrangement allows companies to access specialized services or equipment and not shoulder all the costs and risks of going it alone.

Choosing the Right Warehouse Space for Your Business is Essential

Leasing warehouse space offers a range of operational advantages for companies looking to scale their business or manage inventory in the face of supply chain risks and seasonal or market fluctuations. With flexible lease terms and layouts that can help realize cost savings and logistical efficiencies, renting warehouse space can elevate your business to next-level status in no time.