Successful business growth requires careful planning and progressive growth. If you grow too slowly, you are unable to handle your customer?s demands. However, if you grow too quickly, you can end up losing money and overestimating your needs. One of the most common results of overgrowth is in purchasing business space. You have outgrown your home office, but is purchasing warehousing and distribution space really the best solution? It most cases, it is not. Commercial leases usually provide the best advantages during this transitionary growth period.
Short lease terms
Perhaps one of the biggest advantages of leasing commercial warehousing is that you can obtain a short term lease. Leasing retail space, whether it is for warehousing and distribution or retail needs, usually only requires a minimum of a one year contract. E commerce is expected to grow at a compounded annual average rate of 10% over the next five years, creating tremendous opportunities for owners and developers of warehouse and distribution space. The problem, however, is that not all of these businesses will succeed in the long term. With a commercial lease, you can pay out your yearly rent, and evaluate your options. If you purchase, you are stuck with the mortgage on a space you might not be able to fill.
Similar to residential properties, industrial warehouse spaces require upkeep and maintenance. When a problem occurs, the repair costs can be very expensive. If you are a new business that has just transitioned into the warehousing and distribution space, this could be a damaging cost. It could cut into your profits or funding that is needed for other important parts of the business. However, when you choose to rent, you do not have to worry about these costs. Approximately 166,907 men and women in the U.S. work in the storage and leasing industry. You do not want to have to lay off valued employees to cover repair costs. The growing warehouse market will make it very difficult to replace them later on.
When you purchase a commercial space, you have little options available in terms of negotiating. You might be able to negotiate the price, but with growing warehousing and distribution industries, this is not very likely. When finding a warehouse to rent, you are likely to have many more negotiation opportunities. You can find a warehouse center based on size, location, and price. If the property owner has been unable to rent out the space, they are more likely to make further negotiations. You could get lower rent fees, at least for the first year, or they might allow you to make structural changes to better suit your business needs.
Many options when you are ready to buy
The goal of business success is to eventually be at the point that you can purchase your own warehousing and distribution space. Some might worry that there will be limited options with the growing number of warehouse businesses. This is not likely to be the case. Since 2000, the amount of occupied distribution and warehouse space has increased by 86.2%. As more and more warehouse and distribution businesses are established, there will be an increase in the number built. In fact, you might even have more options available to you when you are ready to purchase your own commercial space.
Every businesses owner?s primary goal is business success and growth. Growth means that you have an ample amount of customer demand. It also means that you have more abilities to profit. However, growing too quickly can damage the brand and can actually cause you to fail. Do not make the mistake of purchasing a warehouse or distribution space as you outgrow your home office space. The next step should be commercial rental. With commercial rentals, you have more room for negotiations, can sign shorter term leases, and do not have to worry about the high costs of upkeep and repairs. Additionally, when you are ready to purchase, there will be even more options available in the real estate market.