How Much is Your Warehouse Rent - Really?
Industrial and warehouse lease rates - how landlords quote the rent
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Industrial rental rates can be deceiving and difficult for the layperson to understand. It is because of this that we must be sure to get clarification on how landlords quote rent.
Your industrial occupancy costs are primarily made up of four components:
- Base rent quoted on a per square foot per year basis (psf/yr)
- Proportionate share of property taxes (psf/yr)
- Proportionate share of property insurance on the building (psf/yr)
- Proportionate share of Common Area Maintenance (CAM) (psf/yr)
Various landlords quote their rent differently and that difference can represent up to 30% of the overall occupancy costs for a given location. This obviously varies city to city, area to area, and are also influenced by other factors. The following shows the differences in quotes and how they differ:
Industrial Gross (IG)
This quote is the most accurate basis for comparing the cost to occupy any given industrial property. This quoted rental rate will include Base Rent, Property Taxes, Insurance, and CAM. Quoted on a per square foot basis per year, this will render the most complete analysis of cost to occupy.
Triple Net (NNN)
This quote will only include the Base Rent per square foot per year. If quoted this way, we must determine what additional expenses are related to Taxes, Insurance and CAM per square foot per year so that we can compare apples to apples between different options. These costs can account for up to 30% of your occupancy expense.
There are some other derivatives for quoting rent, but these are the two most common. As you can see, it is critical to understand how rental rates are quoted, and to make sure that we are not missing any material components necessary for determining the best facility for your company.