Choosing the right location is one of the most important steps in any business owner’s planning process.
For warehouse owners, it’s essential.
Don’t just go with the first option that comes up. Instead, read on to find out about seven factors to consider when choosing a location.
One of the first things most business owners consider when looking for warehouse space to rent or buy is cost.
Rent or property taxes are the most transparent of these costs, so it’s a good place to start.
Prices vary based on location and range from an average of $2.56 per square foot per year in Memphis, TN to $16.50 per square foot per year in San Francisco, CA.
The cost of renting, leasing, or buying warehouse space varies depending on square footage and specificity of the business owner’s needs. A&A Machinery offers competitive rates for large equipment warehousing, which makes its facilities a perfect option for heavy machinery owners, manufacturers, contractors, or dealers around Morrisville, PA that want to save money on short-term or long-term storage.
Not every location offers easy access to skilled warehouse workers, so business owners need to consider demographics when they choose a warehouse location.
Think about staffing in terms of supply and demand. In locations with low workforce availability, demand will be higher and workers will demand higher salaries.
In places with high workforce availability, the opposite will be true. Workforce availability isn’t just about expected pay.
If the local workforce doesn’t have the right skill set, it will drive up costs and reduce customer satisfaction, making it more difficult for warehouse owners to stay competitive in local and national markets.
Providing training to inexperienced workers can cost a lot, so it’s usually a better idea to research demographics in advance to make sure there will be skilled workers available to staff the warehouse.
Roads and Traffic Flow
If trucking is the main mode of transportation for goods stored in the warehouse, it’s important to find a location close to highways and interstates.
That’s not the only thing to consider, though.
Congested surface roads and highways increase accident rates and make it more difficult for drivers to get in and out of the warehouse to transport goods efficiently.
Consider average traffic volume and speed, peak hours, and road conditions as well as proximity to highway on-ramps and off-ramps.
Proximity to Other Modes of Transit
Not all goods can be transported by semi-truck.
Warehouses that accept and ship goods by rail, air, or sea should be located close to railway lines, airports, or ports.
Proximity to these shipping hubs helps to control drayage costs and increases warehouse productivity. Keep in mind that shipping industry standards and costs are constantly changing.
To give one example, the Bureau of Transportation estimates that 12 million tons of goods are currently shipped by air, but by 2045, they believe that as many as 41 million tons may be shipped using this method.
Since each warehouse handles different types and volumes of goods, facility owners need to consider their companies’ unique needs.
Every warehouse has utility requirements, but they vary depending on the type of goods or equipment being stored.
Refrigerated warehouses tend to be more dependent on water and electricity, for example, while heavy machinery storage requires a ton of space.
These factors influence utility costs.
Make sure that the chosen city or neighborhood is equipped to provide affordable utilities to large commercial and industrial facilities, and find out in advance how much it will cost.
The easiest way to get a basic idea of costs is to check with the U.S. Energy Information Administration and use the data they provide to make an informed decision.
Proximity to highways, ports, airports, or rail lines isn’t the only thing business owners need to consider when looking for warehouse space.
The health of the local markets being served is just as important, especially for those business owners who operate brick-and-mortar stores that cater to local populations.
Choosing a location that is close to the business’s customer base will reduce lead times and improve customer service, making it easier for businesses to maintain brand loyalty and attract new customers.
For business owners that operate on a national level and conduct most of their business online, this is less of an issue.
Proximity to suppliers or manufacturers may be more important. Either way, consider the company’s supply chain partners and try to find a warehouse space that will make the supply chain more efficient.
Customers will win since they’ll get their goods faster, manufacturers will win because it increases the demand for their products, and business owners will win because they’ll be able to grow their customer bases and increase their bottom lines.
Other Environmental Factors
It’s unwise to rent or buy warehouse space in an area prone to extreme weather and natural disasters.
Earthquakes, tornadoes, floods, fires, and even severe winter storms can all damage local infrastructure, making it more difficult for businesses to ship and receive inventory.
Think beyond the potential impacts of environmental factors on the warehouse space, itself, and consider how well the municipality is prepared to handle natural disasters efficiently to avoid unnecessary shipping complications and facility downtime.
While there’s little to be done about inclement weather events like tornadoes or earthquakes, the municipal road crews in places prone to hurricanes and blizzards are typically better equipped to handle their consequences on roads and utilities.
The Bottom Line
Choosing the right warehouse location can be tough for any business owner.
This is true whether business owners plan to purchase land and build their own warehouses, lease existing spaces, or just rent short-term or long-term storage space in an existing warehouse.
It’s worth taking the time to figure out exactly what the company’s needs will be when it comes to storage capacity, investigate the local market and environmental conditions, and consider all available options before making the final call on which space to rent, lease, or buy.