Are you curious about renting a warehouse space for your growing business?
If so, you may be starting to look around for a small warehouse space for rent and wondering if you can afford it.
Unfortunately, it’s not all that easy to determine the cost of leasing a warehouse space from month to month. How much you can expect to pay depends on so many factors.
Plus, it doesn’t help that many landlords and brokers describe their fees and rates in language that’s very difficult to understand. So we’ll attempt to break it down for you here.
Understanding the Three Primary Numbers
Right out of the gate, it’s important that you understand you will be paying for electricity and water. So that figure will be added to the actual rent amount. And it can vary from month to month – depending on your usage.
Water and electricity aside, here are three primary numbers landlords work with to determine how much your warehouse is going to cost. They are:
- the amount of space in square feet that you will need
- the base rental rate (this may be monthly or annually)
- the estimated operating expenses (also known as the triple net lease, or NNN)
Numbers one and two are fairly straight forward. You have an idea of how much space you will need and there will be an average base rental rate for that. For example, it might be $0.90 per square foot per month, and you’re looking at 4,000 square feet.
Easy enough. .90 x 4,000 = $3600 per month.
HOWEVER, added to that will be a triple net lease or the NNN.
What Is an NNN?
NNN stands for net, net, net and it’s a structure whereby the tenant pays the property insurance, the property taxes, and the common area maintenance (CAM). The CAM often includes the following:
- Parking Lot
- Exterior maintenance
- Snow removal
- HOA fees
If may even include property management and accounting costs.
The landlord determines what the NNN lease rates will be, but the figure has to be based on real expenses. Leases from reputable landlords should outline how NNN costs are calculated when they’re calculated, and how that information would be delivered to you.
So let’s say the landlord estimates operating expenses will be an additional $0.75 per square foot per month, which may not sound like much. But it ends up adding another $3,450 per month. That would put your total at $7,450 per month.
If you’re looking for a warehouse space to act as an order fulfillment center, you’re looking at even more expenses for those services.
Be Sure to Ask the Important Questions
When comparing warehouse properties, just be absolutely clear about who is responsible for every single expense that may come your way.
As noted above, many triple net leases require you to pay for CAM – or common area maintenance. If this is not part of your NNN, be crystal clear with the landlord about where your responsibilities lie. Otherwise, you may get saddled with some serious expenses after you sign a contract.
Looking for the Perfect Small Warehouse Space for Rent?
When searching for a small warehouse space for rent, keep in mind everything we mentioned above. It could end up making a HUGE difference.
And keep checking back with us for more informative articles!