Sunday, October 25, 2015

How to Calculate the Monthly Cost of Leasing Warehouse Space

How to Calculate the Monthly Cost of Leasing Warehouse Space
One of the main decision making factors in choosing which industrial or warehouse space you want to lease 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:

The size in square feet (sqft) that you want to lease.  (e.g. 5,000 sqf)
The base rental rate.  Some landlords quote monthly rates (e.g.Rs.9/-per sq ft) and others quote yearly (e.g. Rs.108/-per sq ft)
The estimated operating expenses (Varai and Maintenance).  Some landlords quote monthly (e.g. Rs.1/-per sq ft) and others quote yearly (e.g. Rs.12/- per sq ft)
********Note for comparison purposes above Rs.9/-per sq ft/mo is the same as Rs.108/-per sq ft/yr ***********

Most landlords of industrial and warehouse spaces will require that you pay both base and Varai / Maintenance.  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 Rs.150/- to Rs.200/- 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 SQFT
Quoted Base Rental Rate = Rs.9/- per sq ft / mo
Estimated operating expenses (Varai) = Rs.1/- per sq ft/mo
Total asking lease rate = Rs.10/- per sq ft/mo
Monthly Rent = 5,000 x Rs.10/- = Rs.50,000/- per Month

Warehouse example of landlord quoting yearly rental rates
Square footage of warehouse Property = 5,000 SQFT
Quoted Base Rental Rate = Rs.108/- Per sq ft /yr
Estimated operating expenses (varai) = Rs.12/- Per sq ft/yr
Total asking lease rate = Rs.120/- per sq ft /yr
Monthly Rent = 5,000 x Rs.120/- = Rs.6,00,00/- / 12 = Rs.50,000 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?

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