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Rising Industrial Rents: Seven Tips for Moving Your Facility

By Mike Paleo

As industrial rents drastically rise throughout the country, the probability of moving your warehouse, distribution center or manufacturing plant is more likely than ever. Nationally, rents for industrial space were up 9.7 percent for the first part of 2021, and in the Inland Empire, for example, they are up 24.1 percent. That’s a huge increase that many occupiers have not planned for and need to be aware of. This increase is most pronounced in supply-constrained submarkets where companies are seeing rent increases of as much as twice what they may have been paying 10 years ago. These shocking increases impact affordability and the bottom line. While it might not have been a consideration before, moving your warehouse is now something that may be on the horizon for your business.

If you do end up needing to evaluate alternative space options to manage future growth, relocate to a less costly area or reduce operations into smaller footprint, here are seven tips for making a successful warehouse move:

1. Start the Process Early
Your old lease and your new lease may not conveniently line up during your slow season. Timing is key as companies need to balance the operational disruption of a relocation with the cost implications of paying double rent or “holdover” rent if the process is not managed appropriately. If moving out of state, consider the incentive packages for relocation as it could result in millions of dollars of concessions. Starting the process early allows you to manage time, resources and expectations.

2. Communicate Clearly
Your team will want to know what’s going on, and you’ll also need their help to make sure the move goes smoothly. Make sure to communicate clearly from the beginning, and to include the right team members at all levels of the process.

3. Build a Dedicated “A” Team
Real estate brokers, logistic partners, IT professionals, sprinkler consultants, racking specialists, space planners and move coordinators, among a few, can all give guidance to effectuate a successful execution.

4. Assess Your Flow
Are you making the best use of your current workflow and set up? Before moving to a new space, identify areas where you may be able to optimize flow and reduce your footprint. This will help you know exactly what type of space and features you need in your new facility. Provide this information to your broker so they can select properties to show you that make sense for your new needs. Write down a workflow plan for your new space so that you can communicate your updated processes to your team.

5. Take Inventory
Before packing up, make sure to take a thorough inventory. Determine which items need to be moved and what can be purged. Consider trimming your inventory for a short period of time or use suppliers’ excess space for temporary storage. Get all of that taken care of before your move, then create an inventory map of where everything will go in your new warehouse.

6. Think About Code Compliance
You’ll want all your permits, paperwork and safety equipment up to code for your new facility. Do you need a high pile permit engineer to double check the spacing? Are you pulling a permit on the office improvements and are the lights Title 24 compliant? Think about these things before signing a lease so that you can hit the ground running.

7. Update Your Address
Not only will you want to communicate clearly with your staff, but you’ll want to communicate clearly with your supply chain. Everyone should have your new address and a start date for when shipments should arrive at the new warehouse.

The Big Move
Based on the rising industrial rents, we can anticipate that many warehouse occupiers may need to look for a new space. This may mean moving to a less costly area or seeking out a smaller footprint in your current location. Either way, moving your facility is a big undertaking. By following the tips above, you can make sure that your move goes as seamlessly as possible.

Mike Paleo is a senior vice president of Hughes Marino, a global corporate real estate advisory firm that exclusively represents tenants and buyers. Contact Mike at 1-844-662-6635 or mike.paleo@hughesmarino.com to learn more.

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