Strategic distribution centers and warehouses are vital to the success of businesses that produce consumer goods, or raw materials for other organizations. Building, storing and delivering these goods would be complicated without the utilization of these large facilities.
The location and included technology or automation of the warehouse will impact the price of rent. Naturally, these factors vary and are largely based on each organizations’ supply chain strategy.
For instance, some companies may prefer to operate multiple smaller distribution centers dispersed throughout their market area, while others may choose larger, centralized warehouses. As far as technology, some may want an automated warehouse to help reduce the manpower needed to manipulate goods and decrease human error in picking and packing inventory. Yet the strategy of others may align better with the cost savings that come from a traditional warehouse. Ultimately, these crucial supply chain decisions influence how much companies can expect to pay when leasing a warehouse.
Three main criteria are used to calculate rental costs and the expense is based on a per-square-foot rate.
The floor area is pretty straightforward. Warehouse rent is calculated per square foot. So, the larger the warehouse, the more rent will be—provided all other factors are the same.
The base rental rate is the rate expressed in dollars per square foot of a particular property. This may range from less than a dollar per square foot to much more than a single Washington—depending on the location and features of the warehouse.
Estimated operating expenses aim to determine the property’s monthly or yearly operating costs. They are similar to the base rental rate in that they’re calculated per square foot.
There are two important acronyms to understand when calculating the estimated operating expenses:
Locating a strategic warehouse or distribution center to support business can be challenging. Operating a business from the Freeport Center in Clearfield, Utah, provides undisputable supply chain and logistics management competitive advantages.
The Freeport Center offers businesses world-class manufacturing, warehousing and distribution solutions. We have 78 buildings on 680 acres. And we are located on more than 7 million square feet. In fact, the Freeport Center is one of the largest manufacturing and distribution centers in the United States. Learn why more businesses are choosing to call Utah’s Freeport Center home by calling (801) 825-9741.