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Your Guide to Find Warehouses for Rent or Sale

Astronaut looking into new vacant warehouse space

Looking to lease, buy/invest, or sell a warehouse in the Twin Cities, St. Cloud, and surrounding area?

​We can help.

 

With decades of experience in the investing, selling, leasing, management, and development of industrial properties, CEG knows warehouse spaces and the market. Whether you are a user, tenant, or investor, we can help you find the warehouse, distribution, and/or manufacturing square footage that meets your business or investment goals. Looking to sell? With our network and connections in the industrial commercial real estate market, we get your property or needs out there. Our team markets your space as if it was our own. We also work tirelessly to solve your needs.

 

The {city} area has a variety of industrial property options, ranging in size and type. We guide you through important logistics and help evaluate details, including location and proximity, capabilities, size, utilities, zoning, government rules and regulations, employee costs/recruitment, terms, and price.

 

When we’re on your team, we work for you. As an advisor, negotiator, resource, and truth talker, we are driven to be a valuable member of your team. We walk you through each step of the process and work diligently to help you get the best deal. Our ultimate goal is to help you meet your business and/or investment goals. Typically, we are paid by the industrial property owner. Learn more about commission fee structures here.

What are warehouse, distribution, and manufacturing space options?

The Twin Cities metro and surrounding communities have a variety of bulk distribution, manufacturing, light industrial, heavy industrial, logistics, and flex warehouse properties available for lease and sale. If existing properties don’t meet your needs, we can help you with new warehouse development or build-to-suit options. Outdoor storage and small warehouse space can be tricky to find, but rest assured, we will work diligently to find the appropriate space for you. CEG knows warehouses.

 

Types of Warehouses:

Bulk Distribution – They are ideal for logistic and distribution companies that ship goods to business or consumer customers. Square footage is typically divided as 90-95% warehouse and 5-10% office. Usually have larger truck courts and potential for trailer drops and lower parking ratios. Ceiling heights range from 24-38’ clear.

 

Manufacturing – They generally have highly specialized infrastructure and finishes like heavy electrical power, chemical storage, and air lines. User-specific capabilities may include drainage, ductwork, ventilation, oversized loading docks, and lines (water, gas, and chemical).

 

Cold Storage – Most cold storage buildings are single-use and built for large national food distribution and manufacturing companies. They usually require specialized foundations to handle freezing and sub-zero temperatures. Large capacity coolers and freezers are used to store temperature-sensitive items and need specific power requirements.

 

Flex Space – Office/warehouse buildings that are designed to be flexible and ideal for companies that need office space with a warehouse component. Ceiling heights usually range for 14-24’ clear. Loading areas are typically dock high or grade/ground level to accommodate smaller box trucks or vans. Flex properties often have more parking, nicer landscaping, and are well suited for startups, light manufacturing, order fulfillment, and technology industries.

 

Specialty Buildings – These properties are specialized to accommodate outdoor storage, research and development, freight/trucking companies, maintenance facilities, medical with clean rooms, and data centers, to name a few.

How do you figure out warehouse space needs?

After you settle on the type of space you need, you need to find out how much square footage is necessary for your business. Consider the following:

 

  1. Storage and Distribution

    • Available Cubic Space: Start with the total square footage. Subtract the office, restrooms, and other non-storage areas square footage. Multiple the remaining by the warehouse clear height to get your storage capacity in cubic feet.

    • Inventory Cube Size: How many pallets do you regularly store? What size? Can they be stacked or racked? Use the storage footprint to multiple the length and width of racks by height, using the highest load in each area. Add the areas together to get your inventory cube size.

    • Storage Cube Size in the Warehouse: Measure the footprint of each pallet rack and calculate their total vertical storage capacity. Multiple the capacity of each rack by the total number of warehouse racks to get the true size of your existing storage cube.

    • Evaluate Your Warehouse Utilization Space: Divide your inventory cube by your storage cube to see how well you are utilizing your available storage space. You need rack space, empty space for workers and forklifts to safely operate, and allow for efficient material handling. Utilization space varies according to products stored, number of times they are turned, and if they have SKUs and date codes. To help improve warehouse utilization, design, and usage, consider different options for storage and retrieval systems, floor storage, and layout.

  2. Manufacturing

    • The type of business, product size, and equipment used are a few of the things to consider for warehouse space planning for manufacturing. The size needed varies for each business type.

  3. Company Growth

    • Be sure the warehouse meets your projected growth needs, including parking for cars and trucks. Consider growth estimates over the terms of the lease.

How much do warehouse spaces cost to lease?

In the Twin Cities metro, net rental rates for warehouse space can vary between $5-8 per square foot. Office rates are higher. Several factors influence warehouse space rental rates, and the type of building, location, infrastructure, and recent construction costs are top of list. Operating expenses like property taxes, property insurance, and common area maintenance fees (CAM) also add to the overall cost. CAM fluctuates from year to year to account for rate changes and maintenance needs. Typically, utilities are not included.

 

Additional expenses could include moving costs, legal fees, security deposits, parking, Internet/data usage, security, outdoor storage, electrical capacity and distribution, furniture, equipment, racking, build out costs, and additional tenant improvements.

 

Owners/landlords quote rates that are based on square footage per year. For example, you will hear “$6 and $10”, meaning $6 base for warehouse and $10 base for office.  Use this formula to calculate the total yearly cost to lease a space:

 

Total gross annual rent cost* = (office base rent x office square footage) + (warehouse base rent x warehouse square footage) + (operating expenses x total square footage)

 

*Divide by 12 to get the monthly cost.

 

Lease Length

How long should you sign a lease? Lease length is driven by the market and varies from city to city. In Minneapolis, St. Paul, and the surrounding metro, most owners are asking for 3-15 year terms for warehouse space leases. Our market is competitive and growing, so shorter leases can be hard to find.

 

Longer Leases

The more competitive the market and the more concessions you ask for causes landlords to hold tight for longer lease demands in lease negotiation. For them, having tenant stability is a preferred, but there are benefits for tenants too. You can lock in favorable rates, as rates tend to go up in a hot market. Since moving can be a huge expense for industrial users, you’ll avoid taking a relocation hit to your budget. Finally, longer leases give you an edge to negotiate for reduced rates, more tenant improvements, and in some cases, free rent. Generally, established and stable companies with clearly defined growth projections sign a longer lease.

 

Shorter Leases

Vacant spaces cost owners/landlords money. It takes time and money to market a space. Additional broker commission fees and money spent on tenant improvements add up with each tenant switch over. Although short leases are hard to find in a competitive market, if a space has been sitting for a while, the suites are smaller, or the tenant is willing to pay premium rates, short term leases can be negotiated. Short-term leases make sense for young companies that project rapid growth and want to be flexible.

How do you select the right warehouse space?

Picking the “right” warehouse means the space has the right location, capabilities, lease terms, security, and size. When choosing the location, accessibility, workforce, proximity, regulations, and cost must be considered. Hiring an experienced industrial broker, helps owners, buyers, and tenants ease the time-consuming and expensive process.

 

 

The Process

  1. Understand Your Needs

    • What type of warehouse are you looking for?

      • Bulk distribution

      • Manufacturing

      • Cold storage building

      • Flex – office/warehouse

      • Specialty

    • Do you need outdoor storage? Cold storage? Heated storage?

    • What capabilities do you need?

      • Loading: cross docking, drive-in, and drive-thru

      • Clear height, bays and column spacing, and floor load

      • Power, security, connectivity, venting, drainage, roofing age, etc.

    • What logistics are important? Trucking? Rail? Easy access?

    • Do you need truck trailer parking spots?

    • How many employees need to be officed?

    • Where do your employees live? Where are your vendors and customers located?

    • What are your growth plans?

    • What is your budget?

  2. Search, Analyze, and Showing/Tour

    • When working with CEG, our team does a deep dive using our listing partners, networking connections, and knowledge of the market to find properties that meet your needs and goals. We will analyze property details, narrow down the options to find the most likely matches, and book property showings.

  3. Request for Proposals (RPIs), Proposals, Counter Proposals, Negotiation and Letters of Intent (LOIs)

    • To further explore a leasing property, a tenant representative/broker sends an RFP to the owner/landlord. Their returned proposal details the location, lease terms and expectations, space details, parking, utilities, lease terms, gross rent, utilities, landlord improvements, etc. As part of negotiation, we start the owner’s offer to better determine items to negotiate.

    • An LOI is used after a sales or leasing agreement has been reached. Signed by both parties, it outlines key deal terms and conditions and serves as a good faith agreement. Although, they are non-binding.

  4. Lease, Build-Out, and Delivery

    • Our brokers review all agreements and may make suggestions. However, we recommend that all final lease documents are reviewed by an attorney. If you need help finding one, through our network, we can connect you with expert CRE lawyers.

    • Our network includes highly regarded vendors that can help you with construction, moving, and set-up of your new space. We’re here to help.

    • If you are entering into a large and complicated build-out, we recommend using a project manager for a smooth construction experience.

When should you start looking for a warehouse space?

When should you start looking for a warehouse space? Start early enough to consider all your potential steps (renewal, relocation, new construction, build-to-suit, etc.) and gain leverage in negotiations. We offer these guidelines, but know, earlier is better:

 

  • 100,000+ SF: 24 months prior to lease expiration

  • 50,000-100,000 SF: 12 months prior to lease expiration

  • Less than 50,000 SF: 6-12 months prior to lease expiration or more in today’s tighter industrial market

Why should you hire tenant or owner representation?

What’s the benefit of hiring a broker to lease, buy, or sell industrial warehouse property? Industrial leases and sales are complicated, and brokers are experts in commercial real estate transactions. They know the market. And they have the knowledge to know what and how to leverage terms to get the best deal and how to avoid hidden costs.

 

Searching for a warehouse space or finding a buyer is time consuming. Most business owners and investors benefit more from focusing on their business, rather than spending the time and stress needed to handle a lease or sale. In the end, brokers save you money.

 

Why hire CEG? With decades of experience in the industrial commercial real estate market, we know warehouse space, and we get deals done. Let’s connect. We’re here to help.

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