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With e-commerce on the rise, warehouses are getting larger.

Understanding Warehouse Costs and Risks

When you are looking to create a monthly budget, make sure you're accounting for all of the expenses below. As an example, let’s say you want to lease 10,000 sf of warehouse space in West Phoenix and let’s say everything has already been negotiated. The landlord is quoting a base rent of $0.60 + $0.20 per month on triple net lease (NNN). Your basic estimated costs would look something like this.  


1. Base rent – $6,000 per month (10,000 sf X $0.60)

2. NNN – $2,000 per month (10,000 sf X $0.20)

3. HVAC Maintenance – Estimate $150 per month

4. Electricity – $1,600 per month. (average is $2 sf per year so 10,000 sf X $2 / 12)

5. Property Taxes – $200 per month (avg. $0.20 sf per year X 10,000 sf x $.20 / 12)

6. Property & Liability Insurance – $200 per month +/- (depends on your business)

7. TOTAL ESTIMATED MONTHLY COSTS – $10,150 per month, + rental taxes

Triple net leases present their own kinds of risk to both parties;  Tenants carry the risk that landlords may not work as hard as they should to control the building’s operating expenses as those are passed through to the tenants. Landlords will counter that debate by representing they have market incentives to moderate building costs, because a building that is expensive to operate becomes less attractive to prospective tenants under triple net leases. 

Opportunity Zones

Investors who reinvest capital gains monies in Opportunity Zone funds may receive reductions on capital gains taxes relative to the years of their investment. 

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Creating a Warehouse Strategic Plan



Growth?  It's especially important to make sure your assessment is current. Whenever possible, a warehouse should have room to grow.



Where are you in proximity to your largest customers, and where will you be if you land the accounts you're hoping to?  Location is important. 



Needs? Technology, vertical space, docking, movement, volume, and expectations within a warehouse can change drastically from year to year.  

Third Party Logistic


Can Third Party Logistic services easily reach your location?   If the proper strategies aren't in place, managing the freight shipping process can be a time-consuming and energy-draining process. 

Local Labor Pool


Do you have the right placement to tap into the local labor pool?  In e-commerce fulfillment centers, labor supply is even more in demand due to the higher number of workers required per square foot. 



Does the facility have stable, reliable access to the utilities it needs to operate? Lighting and space heating/ cooling account for approximately 76 percent of total use.

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