Buying Warehouses for Sale: A Business Owner's Guide
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For businesses of all shapes, industries, and sizes, warehouse space plays a critical role in the supply chain creation process. Often, organizations will invest in warehouses for sale to manage storage, inventory, and manufacturing needs.
Buying industrial property, like a warehouse, differs greatly from buying an office or other business property. Here, we'll cover everything business owners need to know about buying warehouses for sale, from property identification and selection to maintenance requirements and upkeep.
Let's get started.
What Do I Need to Know Before Buying a Warehouse?
When searching listings for warehouses for sale, be sure to think about the following considerations.
#1 – Location
The number one rule of commercial real estate is location, location, location—and the same is true of warehouses. Warehouses need to be close to transportation infrastructure, like highways, airports, and waterways, and close enough to residential areas for deliveries.
Properties that are closer to residential areas and transportation will be more expensive, so it comes down to balancing the trade-offs between a higher sales price and expected revenue.
#2 – Storage Requirements
Depending on the type of materials you work with, you may need special storage considerations, like climate control or freezers. Similarly, you'll need specific storage environments if your company handles toxic materials.
Warehousing is also a flexible property. For example, flex industrial space often has office and retail space in addition to warhouse space, and it can be modified to accommodate your business's needs. Storage requirements may also include any equipment you'll need for handling materials, like forklifts and dollies.
#3 – Employment Considerations
Every warehouse needs employees to staff it, so you should take the time to look at surrounding employment demographics. What's the unemployment rate or the average warehouse employee wage in the city? What's the median age of the labor force? Do you expect to see high employee turnover?
Depending on the nature of the work, you may be able to automate part of warehouse operations. Automation can effectively solve many staffing issues, so it's something every warehouse owner should consider.
#4 – Size
According to data from the US Energy Information Administration, the average size of a warehouse in the US is about 17,400 square feet, though actual warehouse sizes can range between a few thousand square feet to several hundreds of thousands of square feet.
Warehouse size depends on the kinds of products and materials you need to store, as well as the kinds of equipment you'll need.
Should I Lease or Buy a Warehouse for Sale?
The ever-present choice for business owners that need warehouse space is whether they should rent or buy. Renting provides more flexibility and is less expensive in the short term, leaving more money for more immediate business options.
However, buying warehouses for sale has its benefits. You'll own and have full control over the property, so you're free to remodel and update as you see fit.
Additionally, a warehouse itself can be a valuable business asset, with the makings for a good, long-term investment.
If you plan to build and expand your business, buying a warehouse for sale could be the better, longer-term decision. Owning gives you free rein to use the property as you see fit, and warehouses can form a valuable part of a business's commercial real estate portfolio.
What Are Some Common Warehouse Hazards?
Warehouses in particular come with several occupational hazards because most warehouses deal with moving heavy objects and potentially dangerous materials. Warehouse workers can sustain injuries from physical strain or repetitive motion injuries, and there are risks of falling objects.
Depending on the type of the materials your company works with, warehouse workers might need protective gear for handling toxic substances. Workers in warehouses can also risk injury from heavy machinery, such as forklifts and pallet jacks. The average injury rate for warehouse workers is about 5 out of 100.
How Do You Evaluate a Warehouse?
Warehouses are relatively simple properties compared to other types of commercial real estate, so evaluating their features is more straightforward. Below are some factors that reflect warehouse quality and suitability.
#1 – Lighting
Lighting is crucial if you are going to have employees handling heavy materials. Bad lighting not only makes it harder to work but can increase the risk of injury in the workplace. One of the perks of buying a warehouse for sale is that you can add new lighting to fit your needs.
#2 – Appliances
Will your warehouse have staff on hand at all times? If so, you'll need basic appliances, like HVAC and bathrooms. Take the time to ensure that such appliances are in good condition before you commit to buying.
#3 – Maintenance Requirements
Whether you're using the warehouse for your business or leasing it out, you need to consider maintenance and operating costs. If you decide to lease out the warehouse, you can opt for a triple-net (NNN) lease where the tenant is responsible for most maintenance and operating costs.
#4 – Parking Situation
Parking is not just for customers but also for employees and other vendors. As a general rule of thumb, warehouses should have one parking space for every 1,000 square feet of floor space. If you plan to have larger delivery trucks at the warehouse, you'll need larger parking accommodations.
Do Warehouses Appreciate in Value?
Yes, warehouses can appreciate in value, just like any other kind of commercial property. When consumer demand is high and companies need more space for logistics and deliveries, warehouse space value goes up.
For example, average rents for warehouse space and industrial sales and construction exploded during the COVID-19 pandemic as eCommerce demand shot through the roof. Between 2021 and 2022, the average sales price for industrial properties, including warehouses, jumped nearly 10%.
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