While looking out for a Warehouse on Lease it is imperative to consider the following points as moving in/ out of a space is extremely cumbersome and very often an irreversible decision due to the monies invested to commence operations. Here are the 10 Steps to Guide you on deciding to choose your Warehouse on Lease:
Logistics defines your location. Being accessible is one of the fundamental requirements for choosing a property. For example, in the case of Chennai, a location for an E-Commerce distribution center alongside Poonamallee is considered central & is highly preferred due to ease of access to multiple zones from there.
- Raw Material: The first and most important aspect that goes into choosing a property is to identify from where and how your raw material will arrive. Raw materials may arrive by road, rail, air or by the seaport. Depending on these, it is advisable to choose a location to ensure that the procurement/ arrival of raw material is made easy. For example, for a thermal power plant it is imperative to be close to a sea port if the coal arrival is by ships.
- Demand & Supply factor of your produce/ product/ service: The consumption (demand) factor needs to be considered when choosing the location of a property. The supply could be for local or domestic consumption or for export and this should define the ease of supplying the material as per the demand centers. The demand zones play an important factor in determining the location of a warehouse on lease. For instance, an e-commerce giant has a hub in the heart of the city in Chennai at MKB Nagar as it can easily cater to most of its high demand areas across several zones.
2. SIZE OF THE WAREHOUSE ON LEASE
An optimum size is required to be taken into account so that rentals are saved on wasteful spaces and yet space is not less for manufacturing/ processing/ storage etc. We need to plan and calculate spaces for:
- Common parameters:
Loading and unloading area; Ease of Flow of material;
Processing space & movement of men and machines;
Office space/ meeting rooms/ cabins/ dining areas/ waiting areas etc;
Rest rooms/retiring rooms/ security rooms/ toilets/ first aid room etc;
External areas for parking for staff vehicles and heavy vehicles;
Setbacks for fire engine movement/ water & sewage facilities etc;
- Material Quantity
A high demand material will naturally mean huge amounts of stocks being stored. This, thus dictates the size of the warehouse required apart from the above
It is important to consider sufficient spaces for storage of raw material, line of manufacturing and storage of finished goods.
3. Budget & Rentals
Properties which are better located with better facilities will command a higher rental and those that are built for a particular (customized) use will command even higher rentals. The rentals depend on factors such as:
- Location – a location closer to the city/ demand centre will command higher rentals
- Quality of the structure/ property – depending on age and suitability, the rental will vary
- Specifications – A property with better features will command a better rental
- Internal Infrastructure available within the property
- Demand and Supply – A location where demand outstrips supply will command a higher rental
There are also few basic infrastructure requirements such as availability of public transport facilities and ease of access for the work force. Most warehouses today require access for huge containers/ trailers that help in movement of goods and the access roads need to be wide to accommodate these heavy vehicles.
There has to be ease of:
- Entry and Exit
- Loading and Unloading
5. Availability of skilled labour
This is one of the most critical aspects for any industry to flourish. Industries should ensure that they choose zones where labour is easily available and rightly skilled. It is important to study the locations to avoid labour related conflicts such as unionism, timings, wages and other demands.
6. Power Availability
Any industry needs adequate availability of power for it to function. Factories require high power availability as they operate huge machinery. It is thus imperative that such industries are located in zones where power can be easily and quickly made available
7. Precautions in Seismic Zones and areas affected by Natural Calamities
It is generally important for Warehouses not to be located in low lying areas as these may be prone to floods during monsoons. It is also imperative that the floor height is adequate as this would ensure there is no water logging. Construction should be earthquake resistant and all general aspects that affect that zone should be taken care of.
8. NOC & APPROVALS
It is important today to ensure that a property has complied with all statutory compliances and the following basic approvals are in place
- Land & Building approvals including local body approvals
- Fire and (rescue) services department –No objection certificate (Fire NOC)
- Pollution (Control) Department – No objection certificate (Pollution NOC) based on industry categorization by colour – green, red, orange.
9. Market Intelligence and Choice of People to work With
Rentals are not the only factors that impact a wise financial decision. There are several other terms that come into a contract. These include refundable security advances, term of lease, lock-in period, increments on rentals, maintenance, notice period for vacation, rent free period, registration procedures and costs thereon etc. It is important to know fully what is on offer!
10. Consult an Expert:
When you step into a new city/ town/ sub-urban or an unfamiliar location, take help to find a trust-worthy agent/consultant, local real estate broker or Realtors. Gain from the specialized knowledge and market information that a broker provides from his experience on dealing with industrial real estate/ warehouse on lease/ Warehouse on rent in the area and this will help you avoid several unknown and localized pitfalls and prepare you to get the best property and the best deal on the same.
Also check on the background and history of the broker, his capabilities, systems, processes, database, online trust factor and relationships with local landlords etc.