How Much Does it Cost to Rent a Warehouse? A Guide to Warehouse Rent

WAREHOUSE COSTS VARY BY A WIDE MARGIN

Warehouses come in all shapes and sizes, and depending on the amount of space you need and the services you want to employ, costs to rent a warehouse vary by a wide margin.

The problem is, it isn’t always easy to calculate the monthly cost of leasing warehouse space before you sign on the dotted line. This is especially true with many landlords and brokers who describe their rates and fees using confusing acronyms instead of straightforward language.

This guide discloses what to expect concerning the costs associated with renting warehouse space.

FACTORS INFLUENCING WAREHOUSE RENTAL COSTS

Several internal and external factors ensure that the price of warehouse space will never be a “one-size-fits-all" figure, but instead vary depending on specific needs and circumstances. Here are some key elements that affect warehouse rental costs:

Location: Just like personal real estate, location is a prime factor in determining logistics and warehouse rent. Warehouses in urban or densely populated areas are closer in proximity to major transportation hubs and consumer markets. In contrast, facilities located in rural areas might offer different rental rates but could increase transportation and logistics costs.

Size and Space Requirements: The amount of space you need is directly proportional to the cost. Larger warehouses with more square footage will usually cost more.

Type of Warehouse: The cost can vary depending on the type of warehouse. For instance, a standard storage facility will have different pricing compared to a warehouse equipped with material handling equipment, advanced security systems, or automated logistics support.

Lease Terms: Longer lease terms can often result in lower monthly rates as landlords prefer the stability of a long-term tenant. Conversely, short-term leases might come at a premium due to the higher turnover and administrative costs involved.

Amenities and Services: Additional amenities such as advanced security systems, fire protection services, on-site management, and logistical support can also influence the rental cost.

How Much Is Rent for a Warehouse?

Calculating how much your warehouse is going to cost every month typically involves three primary numbers: the amount of space you need (in square feet), the base rental rate (monthly or annually) and the estimated operating expenses (also called NNN or CAM—more on that below). Don’t forget—you will also be required to pay for electric and water use.

A triple net lease (NNN) is a structure where the tenant is responsible for paying all operating expenses tied to a property. The landlord, meanwhile, is not responsible for expenses incurred as a result of operating the business on the property.

Billing is typically a monthly or annual occurrence. Here is an example of how to calculate monthly rental rates for a warehouse in which you need to rent a warehouse with 5,000 square feet of storage space, taking into account the following rates:

Average base rental rate: $0.85 per square foot per month
Estimated operating expenses (NNN): $.25 per square foot per month

For this warehouse, the total asking lease rate is $1.10 per square foot per month. Therefore, the total monthly rent would be $5,500 (5,000 x $1.10).

What You Need to Know About Calculating Costs When Renting a Warehouse

When comparing warehouse properties, it’s important to ask the landlord or broker the right questions to get an accurate estimate of the monthly rent. Be sure to ask:

Who is responsible for performing and paying for maintenance?
Who is responsible for performing and paying for repairs?
Who is responsible for replacing equipment attached to the warehouse, such as the HVAC unit?
Would I have to pay for a common area or for only the actual square footage of the space?
Would I be required to install signs?
Is the landlord willing to pay for any tenant-made improvements?

The answers to these questions are important to know early because you don’t want to discover you’re responsible for such expenses after signing the contract. Should something go wrong that you are responsible for repairing or replacing, your budget could be upended instantly.

RENTING A WAREHOUSE: COMMONLY ASKED QUESTIONS

Renting a warehouse space often comes with a set of questions and concerns, especially for first-time renters. These are common queries potential renters should ask internally and pose to a landlord prior to entering any formal agreement.

Who is responsible for maintenance and repairs?

Typically, the tenant is responsible for maintaining the interior of the warehouse, while the landlord handles structural repairs. However, this can vary based on the lease agreement, so it's crucial to clarify this before signing.

Are there any additional costs aside from the rent?

Yes, there can be additional costs such as utilities, insurance, property taxes (in some cases), and common area maintenance fees. It's important to understand all potential expenses to accurately budget for the total cost of renting the warehouse.

Can the warehouse space be modified?

This depends on the lease terms. Some landlords allow modifications with the stipulation that the space is returned to its original condition at the end of the lease.

What security measures are in place?

Ask about the security features of the warehouse, such as surveillance cameras, security personnel, and alarm systems. Adequate security measures are essential for protecting your inventory and operations.

Is there flexibility in the warehouse space usage?

Depending on the warehouse, there might be flexibility in how you use the space. Some warehouses can accommodate a range of activities, from storage to manufacturing to office work. Clarify with the landlord about any restrictions.

Who is responsible for utility costs?

In most cases, the tenant is responsible for paying for utilities like electricity, water, and internet. However, this can vary, so it's important to confirm who bears these costs.

What insurance is required?

Landlords typically require tenants to have insurance to cover liability and property damage. Ensure you understand the insurance requirements and what the landlord's insurance covers, if anything.

Clear Lease® by Prologis

Prologis understands warehouse costs are complicated, which makes choosing the right solution difficult for business owners. That’s why we designed the Prologis Clear Lease® program.

Prologis Clear Lease® includes base rent and fixes all operating and capital expenses, except property taxes, for the term of the lease. This makes it easier for business owners to calculate costs and manage budgets. Clear Lease® also includes HVAC and warehouse ventilation expenses—costs not typically included in triple net leases.

With Clear Lease®, customers can address day-to-day needs and enjoy best-in-class maintenance and support without dealing with unexpected expenses and year-end reconciliations. Our Clear Lease® offers a simplified agreement with greater cost certainty.