Warehouse Lease

by | May 16, 2023 | Commercial Real Estate Tips, Warehouse space for lease

Warehouse Lease

Elements of Leasing a Warehouse Property in Austin TexAS

Leasing a warehouse property is a process of renting a commercial space that can be used for storage, distribution, or manufacturing purposes

Warehouse Lease Contracts

Warehouse lease agreements are documents that specify the terms and conditions of the lease, such as rent, utilities, insurance, taxes, maintenance, and repairs.  The structure of a lease can vary depending on the responsibilities of the tenant and the landlord. Warehouse equipment leasing is a separate service that provides material handling equipment, on-site service, financing options, and rentals.

 

 

 

 

Elements of a warehouse lease

1.  Base rent: The monthly or annual amount paid to the landlord for the use of the space Base is defined as the lease rate for the respective year.

2. Operating expenses: (NNN) The costs associated with maintaining the building and property.  These are taxes, insurance, and maintenance. OPEX will be paid by the tenant (in a triple net lease) or by the landlord (in a gross lease). Most leases in Central Texas are based on tenant paying OPEX.

3. OPEX is not negotiatble

  • Utilities: The costs of electricity, water, gas, and other services used by the tenant.
  • HVAC maintenance: The costs of maintaining and repairing the heating, ventilation, and air conditioning systems in the space
  • Property and liability insurance: The costs of protecting the tenant and the landlord from damages or losses caused by accidents or damages caused by fire etc in the space.

 

 

Monthly Rent

The total monthly rent for a warehouse space can be calculated by adding the base rent plus the operating expenses per square foot.

Then multiplying by the square footage of space needed. For example, let’s say you need 5,000 square feet of warehouse space in Northwest Austin. A base rent of $0.60 per square foot per month plus operating expenses of $0.20 per square foot per month.

A tenant’s total monthly rent would be $4,000 (5,000 x ($0.60 + $0.20)). Don’t forget the tenant will need to add their utilities, HVAC maintenance, along with property and liability insurance costs.

This will provide a tenant with a gross amount they have to pay per month.

 

Warehouse Lease Advantages vs Disadvantages

  • Leasing a warehouse space has some advantages over purchasing a property.

  • Lower upfront costs

  • Fflexibility to relocate or expand

  • Less responsibility for maintenance and repairs

  • Some disadvantages, are less control over the property, absorbing  rent increases

  • No equity or tax benefits.

  • Potentially difficult Landlords
  • Market conditions that cause inflated lease rates.