How much providers charge for warehouse storage goes beyond simply selecting an appropriate location and signing a lease agreement?
The space expanse required, the warehouse location, and how well it fulfills your personal property or business goals are just a few considerations you must make. Also, warehouse storage rates will depend on the supply and demand for it in the area you need it.
We understand the complexity of renting a warehouse. For example, most providers communicate pricing alternatives through convoluted abbreviations rather than simple English. But we’ll break them down for you.
Here, we’ll also take you through factors influencing warehousing costs. Alongside this, we’ll provide information to keep you in the know-how when dealing with a potential warehouse provider.
Factors Affecting How Much Providers Charge for Warehouse Storage
How much providers charge for warehouse storage is based on three primary factors? These variables include the following:
Floor Area
This highlight is the square footage of the warehouse space you want to lease as a home or business owner.
Base Rental Cost
This factor is the dollar pricing for monthly or yearly space rental per square foot.
Operation Cost Prediction
Here prices are calculated per square foot (psf) monthly or annually. Also, you’ll encounter abbreviations like NNN or CAM.
A triple net lease is what an NNN means. This lease comprises expenses not included in a business tenant’s monthly rent but is necessary to keep the building running. You’ll find variables like taxes, property insurance, and other maintenance fees in NNN expenses.
On the other hand, CAM means Common Area Maintenance. And it refers to the costs associated with maintaining shared areas that a provider passes to you as a renter. So, maintenance and administration fees for the commercial property are included in the operation cost estimate.
Warehouse and factory users often have to pay a base rent plus NNN or CAM to their providers. You may also be responsible for the warehouse’s electricity bill, typically $2 per square foot annually.
Related Article: How to Calculate Warehouse Storage Costs
Costs of Warehousing and How to Estimate Them
You now know what you’ll need to determine what providers charge for warehouse storage. Therefore, let’s compute some monthly and annual prices based on some typical NNN/CAM rates and warehousing costs per square foot.
Let’s say 6,000 square feet is the space you’re renting.
- Rental Rates: $0.69/month or $8/year per square foot for space
- Monthly NNN/CAM: $.31
- Annual NNN/CAM: $4
Now here’s how you can calculate each month:
Total Cost: 6,000 sf x $1.00 (Rental + NNN/CAM) = $6,000 per month
Here’s your annual estimate calculation:
Total Cost: 6,000 x $12.00 (Rental + NNN/CAM) = $72,000 per year
A yearlong rental, in this case, is proportional to a monthly one. However, this is rarely the case. Annual warehouse storage rates typically come with a rent reduction from warehouse providers in Ontario.
Other Likely Expenses for Warehouse Renting
The estimations we just made are the main costs for warehouse rentals. But it’s essential to let you know there may be some ancillary storage costs. They go as follows:
- Power: goes between $1.2 – $2 annually (per square foot).
- Maintenance costs $1-$2 annually (per square foot).
- Regular HVAC Service: goes between $500 and $1,000 annually. If you don’t want it, some providers may ask you to outsource the service regardless.
Questions to Ask the Warehouse Providers
Now you likely have a sense of the ballpark figure for warehouse rental. However, there are some questions you need to ask your warehouse provider before renting. The responses you get to them may show what it additionally costs to use warehouse storage.
- Who is in charge of coordinating and funding needed infrastructure maintenance?
- Who pays for the repair or replacement of warehouse fixtures? — Appliances like air conditioners and heaters fall under this category.
- Who is responsible for organizing and funding the upkeep of MEP systems, computer networks, fire detection and sprinkler systems, etc.?
- Can you put up warning signs? — Signs directing people to the nearest fire egress are one example.
- Is the provider willing to chip in for tenant renovations?
- How much of the building’s total square footage (excluding common areas) do you have to pay for if your business just occupies a portion of it?
The answers to the above questions may raise other concerns businesses must address. Resultantly, you’ll be better positioned to negotiate with the provider or landlord. And you’ll eventually settle on a reasonable rent once these concerns have been addressed.
Should You Buy or Rent a Warehouse Space?
You may consider buying warehouse space instead of renting it. Indeed, there are benefits to acquiring a warehouse. For example, it helps you increase equity.
However, few businesses have the resources and grit to absorb the substantial risks involved in warehouse purchase/ownership. In other words, most small and medium-sized firms can’t afford the higher initial costs associated with purchasing warehouse space.
Even if you could cough out such costs, careful analysis will show that the money may be better invested in expanding your company. Don’t forget you’ll also have to pay for all necessary repairs and upkeep out of pocket, which will take more time and resources.
In a nutshell, renting a warehouse is ideal unless you’re one of the giants of online retailing like Alibaba or Amazon.
Related Article: How to Receive Freight LTL Shipments
Summary
It’s difficult to determine how much providers charge for warehouse storage outrightly. However, as discussed earlier, certain factors can provide insight into warehouse storage rental costs.
A warehouse purchase may sound like a good idea. But the risks associated with it suggest rental would be your best bet. And we’re the best when you need excellent warehouse rental in Ontario.
At Road Linx, we offer secure, convenient warehousing solutions at competitive rates — with transparent price breakdowns too. Call 905-760-1141 to learn more about our warehouse solutions.
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