This warehouse cost analysis will give you a good start toward understanding the US warehouse market today. This information will guide you as you determine the type and location of warehouse properties that fit your investing profile.
How Much Does It Cost To Buy A Warehouse
For additional valuable information about buying a warehouse, read our guide How to Buy a Warehouse as an Investment. And if you are ready to learn about their prices and additional transaction-related costs, read on.
Basic warehouse buildings and older properties with added features that are located in US cities will cost from $625,000 to $750,000 for 5,000 sq ft. Similar properties that are around 10,000 sq ft will cost between $1.25 million and $1.5 million.
City warehouse properties that have added features such as manufacturing facilities will cost anywhere from $875,000 to $1.125 million for 5,000 sq ft buildings. These properties that are in the 10,000 sq ft range will be priced from $1.75 million to $2.25 million.
Good values can be found on the outskirts of these cities in adjacent counties. This is especially true when large highways or interstates connect these markets with the nearby city and other regions. In these markets, warehouse properties with plain shell or older buildings can be had for $300,000 to $400,000 for about 5,000 sq ft. Larger buildings of 10,000 sq ft can cost $600,000 to $800,000.
We found older, lower-priced properties in some of the largest metropolitan areas. The condition of those properties indicated the potential for a significant amount of deferred maintenance. These warehouses should be examined carefully for hidden costs.
The larger the warehouse, the less the cost per square foot will be. A 5,000 square foot warehouse cost will be more per square foot than a 10,000 sq ft warehouse cost per sq ft. Although a 200,000 sq ft warehouse cost will be higher overall, the cost per sq ft will be even lower. This is because larger buildings spread the costs over more square footage.
You can limit the cost of your warehouse construction by working with a company that can both design and build the warehouse for you. Whether you choose tilt-up concrete construction or steel framing, a design-build construction company should handle every aspect of the project.
Warehouse cost will depend on multiple factors, including size and location. Warehouses in areas with a manufacturing background will typically be more expensive due to higher demand for warehouse space, whereas a warehouse in a rural area may be cheaper. The average cost per square foot for warehouse space is around $7.50, so depending on how large you need your warehouse to be, you could pay as little as $11,000 or as much as $800,000.
If the cost per square foot to own a warehouse is around $7.50, then how much is it to rent warehouse space for lease? It depends on what kind of lease you sign, but a common type is a triple net lease or NNN. In this type of lease, the tenant is responsible for all operating expenses. Warehouse rent is calculated using the base rental rate per square foot and the estimated operating expenses per square foot. The average base rental rate is $0.85 per square foot, and the average estimated operating expenses come in at $0.25 per square foot. So the average cost of a warehouse space for lease is approximately $1.10 per square foot.
The rental rate is the amount it costs you to rent the space itself but does not include any additional items like utilities or taxes. NNN/CAM charges represent other costs besides the rental rate (otherwise known as additional occupancy expenses). If a landlord includes utilities in their quoted price for warehouse space, it would be included in the NNN/CAM charges; otherwise, utilities would be an added expense on top of your rental rate and NNN/CAM charges.
Nowadays, the costs that enterprises need to invest in self-built warehousing include warehouse rental costs, personnel costs, equipment costs, etc. Especially for some novice merchants, if the warehousing and distribution efficiency is low, the error rate is high, and there is little order information in the off-peak season. Then the equipment, machinery and equipment, and labor are wasted, which will lead to an increase in storage costs.
The average turnkey cost to build a warehouse ranges from $20 to $60 per square foot. Typical costs can vary, with a small 30x40 warehouse costing $35,000 to a 50,000-square-foot distribution center costing over $1M.
Size: The size of the warehouse will significantly impact the overall cost. Larger warehouses will require more materials and labor and may also require more specialized equipment and professional services.
Materials: The materials used to construct the warehouse will also affect the cost. Different materials have different price points; some may be more expensive to maintain or upgrade over time. For example, concrete, glass, and insulated metal panels (IMPs) are considerably more expensive than standard metal wall and roof panels.
Design: The design of the warehouse, including the roof style and layout, will also affect the cost. More complex designs may require more materials and labor and may also require additional engineering and design time.
Intended use: The intended use of the warehouse will also impact the cost. For example, a warehouse used for storage only may have different requirements than a warehouse used for manufacturing or distribution.
Pre-engineered metal building (PEMB) construction involves using prefabricated components that are bolted together on-site to form the structure of the warehouse. This method is often faster and more cost-effective than other construction methods, but it can have limitations in terms of design flexibility. For additional details, see our page on pre-engineered warehouses.
Tilt-up construction involves pouring concrete onto a horizontal surface and then tilting it up into position to form the warehouse's walls. This method is also relatively fast and cost-effective but may not be suitable for larger warehouses or those with complex designs.
Structural steel-frame construction (weld-up) involves using steel beams and columns to form the frame of the warehouse, which is then filled in with other materials, such as concrete or masonry, to form the walls and roof. This method is more flexible in terms of design and can be used to construct larger and more complex warehouses, but it is also more labor-intensive and costly compared to the other methods.
The size of the warehouse should also be based on the size of the vehicles that will be used to transport goods in and out of the warehouse, as well as the size and layout of the surrounding area. In general, it is best to choose a warehouse size that is large enough to accommodate current and future needs but not so large that it is inefficient or costly to maintain.
The most frequently asked question we receive from customers is how much does outsourced warehousing cost? While it is a complicated answer, back in 2017 we started collecting data from our extensive network of warehousing and best fulfillment companies each year in order to help both businesses and warehouses alike to understand average warehousing pricing and costs. This page is the culmination of many years of work, and includes historical survey results from each of our annual warehousing costs and pricing surveys. With data accumulated from both the warehouses in the US and warehouses in Canada, the results help companies searching for pricing information for 3PL companies near me or throughout all of North America.
Before we jump into the most recent warehousing costs and pricing survey results from 2022, we want to provide a few important pieces of information to not only navigate the page easier, but also to summarize key data into a helpful table of important warehousing costs and to explain some of the differences in warehousing costs between outsourcing and leasing or purchasing a warehouse.
The cost of renting, leasing, or purchasing a warehouse space varies dramatically, depending upon several key factors: the location of the warehouse, the supply or scarcity of warehouse space in the area, the size of the warehouse space, the intended use of the space, and the amenities of the warehouse itself.
As opposed to using an outsourced solution as detailed above, calculating the cost of renting, leasing, or purchasing a warehouse requires the use of an equation and is a little more complicated. The elements of the equation to calculate the cost of a warehouse are as follows: how much warehouse space you will be using, the monthly or annual rate to rent, lease, or purchase the space, and the estimated operating expenses to utilize the warehouse.
The average warehouse cost per year per square foot in our latest survey to rent a warehouse was $7.96. Operating costs can easily add another $2-5 per square foot to the overall costs of renting warehouse space. Operating expenses can reasonably be estimated as follows:
The overall cost of a small warehouse is obviously lower than the cost of a large warehouse. However, the monthly warehouse rental rate per square foot for a small warehouse may be higher than that of a larger warehouse. This is because the landlord is subdividing the space. The price of a small warehouse is more cost effective than a larger space because all the operating costs will be a smaller percentage of the whole space.
Building or purchasing a warehouse space is by far the most expensive option for procuring warehouse space. While it does represent a tremendous investment opportunity, it is best suited for a company with cash reserves and/or an ability to secure a long-term loan or note. The warehouse price or cost will vary based on the same criteria listed above but will also include the type of materials used to construct the building and any added functionality added to the construction. The cost of purchasing or building a warehouse can range from $20 per square foot to $50+ per square foot.
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