How to Choose the Right Industrial Space for Your Business
Introduction
Choosing the right industrial space is a critical decision that can impact a business’s efficiency, costs, and long-term success. The wrong space can lead to operational inefficiencies, unnecessary expenses, and logistical challenges.
In this guide, we’ll cover:
✅ Key factors to consider when leasing industrial space
✅ How to calculate the right amount of space for your business
✅ Different types of industrial properties and their best uses
1. Understanding the Different Types of Industrial Spaces
Industrial real estate comes in various forms, each designed for different business needs.
| Type of Industrial Space | Best For | Key Features |
|---|---|---|
| Warehouse / Distribution Center | E-commerce, logistics, wholesalers | High ceilings (24’+), dock-high doors, truck parking |
| Manufacturing Facility | Heavy industry, fabrication | Heavy power supply, specialized ventilation, crane capabilities |
| Flex Space | Showroom, small businesses, startups | Combination of office & warehouse, adaptable space |
| Cold Storage / Refrigerated Warehouse | Food distribution, pharmaceuticals | Temperature-controlled storage, high operating costs |
| Truck Terminal / Cross-Dock Facility | Freight companies, 3PL providers | Minimal storage, multiple dock doors, located near highways |
📌 Pro Tip: Knowing which type of space your business needs before touring properties can save time and prevent costly mistakes.
2. How Much Industrial Space Does Your Business Need?
Determining the correct amount of space is crucial to avoid overpaying for excess space or outgrowing your lease too quickly.
A. Calculating Warehouse Space Needs
Most industrial users calculate space needs based on pallet storage or operational footprint.
$$ \text{Total Space Needed} = \frac{\text{Number of Pallets} \times \text{Pallet Footprint (SF)}}{\text{Building Height Utilization}} $$
🔹 Example:
A logistics company stores 5,000 pallets
Each pallet requires 20 square feet
Warehouse ceiling height is 30 feet
80% utilization rate (stacking efficiency)
Using those values:
$$ \text{Total Space Needed} = \frac{5{,}000 \times 20}{0.8 \times 30} = 125{,}000 \text{ SF} $$
Result: The company needs at least 125,000 SF to accommodate its operations.
📖 Read more: "The Top 5 Mistakes Industrial Tenants Make When Leasing a Warehouse."
B. Considerations for Manufacturing Facilities
Ceiling Height: Does your equipment require extra clearance?
Power Requirements: Does the property provide 3-phase power for heavy machinery?
Loading Areas: Are dock-high or grade-level doors needed?
📌 Pro Tip: Many manufacturing tenants require at least 800 amps of power to run heavy equipment.
3. Key Location Factors to Consider
The right location impacts transportation costs, employee access, and overall efficiency.
🔹 Key Location Considerations:
✅ Proximity to Highways & Ports – Reduces transportation costs for logistics-heavy businesses.
✅ Labor Availability – Are there skilled workers nearby?
✅ Zoning Regulations – Is the site legally zoned for your industrial use?
✅ Flood Zones & Environmental Risks – Are there risks that could impact operations?
📖 Read more: "Zoning Laws for Industrial Tenants: What You Need to Know."
4. Lease Structure Considerations: Understanding Triple-Net (NNN) vs. Gross Leases
Industrial leases are structured differently than office or retail leases. The most common lease types include:
🔹 Triple-Net (NNN) Lease
✅ Tenant pays for property taxes, insurance, and maintenance.
✅ Lower base rent but higher responsibility for expenses.
✅ Common for distribution centers, warehouses, and large-scale industrial properties.
🔹 Gross Lease
✅ Landlord covers most expenses; tenant pays fixed rent.
✅ Higher base rent, but simplified cost structure.
✅ Common for smaller industrial spaces or flex properties.
📖 Read more: "The Pros and Cons of Triple-Net (NNN) Leases for Industrial Tenants."
5. Growth Considerations: Avoiding Common Lease Pitfalls
Many businesses outgrow their industrial space faster than expected.
🔹 How to Future-Proof Your Lease:
✅ Include Expansion Clauses – Negotiate an option to lease adjacent space.
✅ Review Sublease Options – If your business contracts, can you sublease extra space?
✅ Consider Lease Term Flexibility – Balance long-term stability with future growth needs.
📌 Pro Tip: Short-term leases (3-5 years) provide flexibility for growing businesses.
6. Final Thoughts: Making the Right Choice
Choosing the right industrial space requires a balance of location, size, lease structure, and future growth considerations.
✅ Ensure you’re choosing the right type of industrial space for your business.
✅ Accurately calculate how much space you need to avoid unnecessary costs.
✅ Negotiate lease terms that allow for growth and cost predictability.
📞 Need help finding the right industrial space? Schedule a Consultation Today.
