How to Calculate the Monthly Cost of Leasing Warehouse Space

how to calculate cost of warehouseOne of the main decision making factors in choosing which industrial or warehouse space for rent you want is the monthly cost……..however how do you calculate that?  Most landlords and brokers throw out acronyms left and right and quote warehouse lease rates differently so it can sometimes be difficult to figure out.

Calculating your monthly warehouse space lease amount involves 3 things:

  1. The size in square feet (sf) that you want to lease.  (e.g. 5,000 sf)
  2. The base rental rate.  Some landlords quote monthly rates (e.g. $0.85) and others quote yearly (e.g. $10.20)
  3. The estimated operating expenses (aka NNN or CAM).  Some landlords quote monthly (e.g. $0.25) and others quote yearly (e.g. $3.00)

********Note for comparison purposes above $0.85 sf/mo is the same as $10.20 sf/yr ***********

Most landlords of industrial and warehouse spaces will require that you pay both base and NNN.  Go to understanding commercial lease rates to learn more.  Also like retail space you also will pay for your own electric usage so make sure to budget $1.50 to $2.00 sf/yr.

Below are two examples of how to calculate your monthly rent when leasing warehouse space

Warehouse example of landlord quoting monthly rental rates
Square footage of warehouse Property = 5,000 SF
Quoted Base Rental Rate = $0.85 sf/mo
Estimated operating expenses (NNN) = $.25 sf/mo
Total asking lease rate = $1.10 sf/mo
Monthly Rent = 5,000 x $1.10 = $5,500

Warehouse example of landlord quoting yearly rental rates
Square footage of warehouse Property = 5,000 SF
Quoted Base Rental Rate = $10.20 sf/yr
Estimated operating expenses (NNN) = $3.00 sf/yr
Total asking lease rate = $13.20 sf/yr
Monthly Rent = 5,000 x $13.20 = $66,000 / 12 = $5,500 per month

Make sure however that when you are previewing and comparing industrial and warehouse properties to ask the landlord or broker all the right questions so you can estimate exactly how much your rent will be each month.  The last thing you want to happen is to budget a certain amount, sign the contract, and then find out that you will owe more than you budged for.

You also want to find out who is responsible for paying for what.  For example who is responsible for the maintenance, repair, and/or replacement of the HVAC unit?

If you have any questions don’t hesitate to call us at 512-861-0525 or fill out our form if you are looking for Austin warehouse space for lease.

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