Top 3 Leasing Mistakes Industrial Tenants Make
Relocation poses major challenges for all businesses, but industrial tenants face a particularly difficult process when moving into a new space. And, these moves can prove absolutely catastrophic if industrial tenants make any - or all - of the three mistakes I discuss in this article.
Mistake 1: Not Enough Power
When a business rents commercial office space, power supply rarely - if ever - comes up in lease negotiations. It’s just not important for these sorts of tenants. But, with industrial tenants, a failure to ensure that a space’s electrical system supports the business’s needs can severely disrupt operations.
As such, during an industrial space search, businesses need to be intimately familiar with the following electricity-related terms - and how they overlap with their particular operations.
Power
● Three-phase: This is a type of electricity generally used for manufacturing and warehousing, and it’s fairly standard in industrial properties. The primary advantages of this type of electricity are 1) it’s more economical; 2) it runs at a lower voltage so is considered to be safer; and 3) it offers more consistent power output that can handle the carrying loads of various equipment run at different times.
● Single-phase: Generally found in industries with lower power requirements, this type of electricity has smaller capacity and is comparable to residential service with standard outlets. This type works best for industrial tenants that don’t need to run multiple pieces of equipment on a single circuit.
Voltage
● 110V: This voltage is typically found in commercial flex space and smaller industrial units.
● 208V: Found in either three-phase or single-phase systems, this voltage has a lower power output so is generally used to power smaller, lower-energy equipment.
● 480V: Found in three-phase systems, this voltage can provide over two times the power on the same current relative to its 208V peer, meaning that 480V is best suited for businesses with high-energy equipment.
Local commercial real estate professionals can help you identify the best industrial space in your market to meet your unique power needs - need help finding reliable ones in your area? Drop us a note!
Mistake 2: Poor Loading/Trucking
In addition to power needs, industrial tenants need to ensure that a space’s loading area supports its needs. That is, if you’re leasing an industrial space, chances are you need to either unload production materials, load products for shipping, or both.
And, if an industrial space’s loading area fails to support operations, businesses will need to 1) pay to overhaul the area; 2) re-engineer loading/unloading processes, or 3) relocate - all of which could seriously cut into the bottom line.
Broadly speaking, loading falls into the following two categories, and businesses should analyze their operational needs to determine exactly what sort of support they need:
● Grade level access: This set-up includes a warehouse door at street level, and it’s best suited for businesses that only need smaller service trucks to deliver products locally.
● Dock high loading: This represents the more typical industrial loading set-up, with warehouse doors leading to loading docks that can support semi-trucks (standard height of 48 inches from ground level). For businesses requiring national distribution, dock high loading is the best option.
Mistake 3: Not Enough Clear Height
The final leasing mistake that industrial tenants tend to make is failing to properly assess their ceiling clear height requirements.
With office space, tenants can afford to solely focus on square footage, as vertical storage isn’t relevant. But, if industrial tenants fail to consider their clear height needs, they can drastically reduce the available storage space in a given area.
Specifically, clear height constitutes the usable space available to industrial tenants for stacking inventory, and it’s measured from the floor to the lowest point of the roof (or support structure, if lower). And, in industrial spaces, this height generally ranges from 18 to 36 feet, meaning that industrial tenants face a wide range of options and need to determine what best supports their storage needs.
If tenants lease a space with far more clear height than they need, they’ll spend the entire lease paying for vacant, unused space. On the other hand, a failure to lease enough clear height means that tenants must deal with a shortage of available space.
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We recognize that, even after outlining the above information, selecting an appropriate industrial space can seem daunting.
That’s why we’re here to help. The Pocket Broker team lives and breathes commercial real estate, so drop us a note to see how we can help you achieve your unique objectives!