3 tips on filling excess space in your warehouse
Businesses can unexpectedly find themselves in a warehouse that is too big for their needs.
Seasonality, shipping stock direct from suppliers... The reasons are endless.
What do you do... when you’re staring at a bunch of empty warehouse space, your sales are flat and you have years to go on the lease?
We have spoken to many businesses in this position, the 3 common tips are-
1/ sub lease the excess space in your warehouse
There are companies looking for flexible warehouse space, without an office.
start up importers looking for room to unpack and store their first container from China
trade people looking for 50m2 to store their trailer and tools overnight
seasonal events or short term projects
If you have a large area to sublease, engage your local commercial real estate agent on listing and finding a sub tenant for you.
Note – check with your real estate agent and landlord to confirm if you are able to sublease your site. Lease agreements often will have a clause about sub leasing and that the landlord will have to give approval.
2/ list space with warehouse-exchange - offer storage for other businesses.
Do you run a forklift onsite?
Can you handle inventory on pallets?
Storing palletised products for your other businesses may be an option.
Enquire to list with warehouse-exchange here.
Note – double check the extra goods you are storing comply with your lease agreement.
Sites can have restrictions on their use and what can be stored. Make your own investigations with the local council and your landlord.
3/ outsource your warehouse – sub lease the whole site
Outsourcing is increasingly popular option for businesses looking to reduce their fixed costs, and focus on their core business. Outsourced warehousing can work on a variable cost basis. This means charges are linked to activity and what you use. For example, storage is charged per pallet space per week.
Work out your current running costs for your warehouse
Seek quotes from third party logistics companies
Compare your own running costs to outsourcing
Additionally, it would be a good idea to engage your area’s commercial real estate agents on subleasing your whole site. They can provide feedback on the leasing market and potential options.
If you can find a sub tenant to sub lease your whole site, on the same terms as your lease.
This then opens up the opportunity to relocate your office to a smaller footprint, with your previous lease commitments covered.
There you go, that’s 3 tips to get you thinking on what to do with that extra warehouse space.
Bonus tip, if your lease agreement is close to renewal..
4/ speak to your landlord about reducing your lease costs
In today’s market, landlords are very keen to hold on to their existing tenants. The cost to have a site empty and acquire a new tenant can be costly and timely.
Ask the question about what they can offer to keep you at the site and reduce your costs.
Negotiate an incentive, such as a free rental period if you sign onto a longer term.
This could offset costs in the short term and give you more time to make necessary adjustments.
Disclaimer – this advice is general in nature and is not intended to meet individual circumstances.
Please seek your own legal advice and consult with your landlord, real-estate agent, local council and other relevant agencies.