Renting -Leasing a Warehouse

How are costs figured for leasing a warehouse in Central Texas?

Warehouse rental cost in Austin

How much does it cost to lease an industrial property in Austin?  What is warehouse rental cost comprised of? Where are the leasing rates today for warehouse properties in Central Texas?

1. Industrial Warehouse rental rates are comprised of two factors:  The base rate- meaning lease rate and the Expenses also known as OPEX or NNN’s.

2. Leasing rates for warehouse space today is updated every 30 days on our homepage-in the middle of the landing page.

 

Calculating Your Rental Costs

Direct rental costs for warehouses uses Square footage, the current expenses, base lease rate and utilities. Utilities can include janitorial – trash pick up costs.

The calculation would look something like this:

SF X Lease rate + NNN’s + utilities , If the lease rate is quoted as $12 psf that is a yearly rate and is divided /12 to get your monthly. In this example a monthly lease rate is $1.00 psf per mo.

You then add NNN’s , so let’s say they are $6.00 psf per yr, that equates to $0.50 psf per mo.

Your total rate for your first year would be $1.50 psf per month + utilities.

 

Market Rates

Market rates change depending on the sub-market and the economics of the territory. High inventory with low demand equals lower rental rates. On the flip side, high demand with less inventory equals higher leasing rates.

In addition to market fluctuations, increases to insurance, property taxes and common area maintenance influence NNN expenses.Every year NNN’s are estimated and may rise or fall. In a hot market, NNN’s always rise.  Are NNN’s negotiable? It all depends on the landlord and their flexibility.  Sometimes Shire Commercial as your broker can negotiate a cap, sometimes it is not possible.

 

Newer industrial properties can have lower NNN’s because they do not have enough history with the taxing municipality.

 

 

Most Expensive to Least Expensive Warehouses?

There are 3 main types of industrial spaces: Bulk, Office-warehouse and Flex warehouses . The most expensive of these are going to be warehouse properties that are in:

1. Tight sub-markets with lower vacancy rates

2. 100% HVAC solutions due to the increased electric required to cool the space

 

The lowest rental rates are going to be for Bulk Warehouses, these are used primarily for storage. You can check the breakdown of warehouse types on our website.  For Bulk warehouses we typically start at 15,000SF and higher regarding usages for clients.

 

 Austin Sub-Markets

Austin has sub-markets that carry most of the industrial inventory. Since 2004, we have tracked the inventory for warehouse property. The highest concentrations of inventory include : NE, Far South and SE Austin. 

Northwest Austin has quite a few warehouse solutions as well. Vacancies in NW Austin historically over the past 5 yrs (since 2016) have been very low @ 5% or less.

 

 

 

Construction

If your company is looking to build your own facility there are some initial important factors to consider.

1. Location

2. Land purchase- there are alot of moving pieces with land.  Size of your building, can the land support the square footage you require?

3. Financing – lender considerations

4. Feasibility studies

5. Developer consultations- Building composition

6. Permitting with the municipality  and much more.

Shire Commercial has helped clients navigate the process of procuring land since 2004.

 

Air Conditioned Warehouses and Standalone

  • Most warehouses in Austin are Not 100% HVAC
  • Large standalone warehouses are rare
  • Current construction consists of industrial parks
  • Industrial solutions can be tilt wall, metal, stone facade with concrete