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Thursday, Dec 7, 2023
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How to Choose the Best Warehouse Location for Business

Are you looking to expand your company’s physical footprint? Opening a new warehouse can help you grow your operations, improve team efficiency, and build your bottom line.

Yet, not just any spot will do.

You need an area that’s ripe for growth and strategically placed in an area of high demand and accessibility. Not sure where to begin? Read on.

Today, we’re sharing a few essential tips to help you choose the best warehouse location for your business.

1. Calculate the Cost of Rent

Unless you’re constructing a new warehouse from the ground up, you’ll likely be leasing warehouse space from an existing building. Before you sign on the dotted line, make sure you fully understand the proposed rental agreement.

While leasing companies will provide you with a base amount, keep in mind that there could also be hidden costs to consider. The number you receive will usually be based on the number of square feet that you’re renting. The agreement could be on an annual or monthly basis, depending on your landlord.

What sets the price?

Of all the different factors, geographic location plays the biggest role. If your local market is considered an economic hotspot, then warehouse rental prices will be higher. On the other hand, less desirable markets will often cost less to set up shop.

The price may also go up if your warehouse includes certain features, such as expansive loading docks. While they may affect the bottom-line rental costs, it’s important to understand that there are core advantages, including these benefits, to having on-site loading docks accessible.

Pay close attention to tax structures and regulations that may affect your market. Some local governments will also provide monetary incentives to companies that want to expand into their region. Inquire at the local chamber of commerce to see if any of these opportunities are available.

2. Assess Employee Availability

Will the new warehouse be staffed entirely by new employees? If so, it’s important to assess the quality and level of talent in that area before committing to a location.

As you do, remember that talent scarcity will drive up hourly rates. For example, if you’re opening a warehouse in a small town in Nebraska, it will be much more difficult to find a skilled and experienced IT engineer than it would be if you searched in New York City.

As such, that engineer can demand a higher pay rate in exchange for their expertise. In turn, this will increase your operating costs. If you can offset those expenses by enhancing your product lines or service offerings, then the trade-off can be a profitable one.

If you plan to staff your new warehouse with existing employees, consider the feasibility of the location. If it’s close to your existing warehouse, then they may be able to commute there with ease. If it’s a significant distance away, will you have to assemble relocation packages?

Even then, can you be sure that your best employees will be willing to make the move? Studies show that from 2013 to 2018, the number of corporate-paid moves fell by nearly 18%. Not only are companies less willing to offer these plans, but employees are equally disenfranchised by the idea.

After two years of pandemic-driven at-home work, employees are seeing the benefits of not being tied to a physical location. It’s critical to consider that even a hefty relocation payment won’t be enough to sway their decision.

3. Check Traffic Flow

It might seem like a small consideration as you’re choosing a warehouse location, but we recommend keeping traffic patterns in mind.

Is the space you’re considering right in the middle of a heavily congested area of town? If so, it might be difficult for employees to enter and exit on a daily basis. This consideration becomes even more important if your company relies on trucking as a primary mode of transportation.

Check to see how accessible the nearest highways and exit ramps are. They should be as close by as possible to ensure that workers can access major roadways.

You should also understand logistics around the average speed and volume of traffic in the area, as well as the peak hours each day. You can contact the city’s local transportation department to get these facts. These representatives should also be able to inform you about local road conditions, as well as updates to any road signs or signals that you need to know.

If you find that the roads are frequently congested, or that they’re scheduled for major maintenance in the coming months, then you may want to reconsider that location. These conditions can lead to more frequent accidents, increased gas consumption, and more time on the road, which can negatively affect morale.

4. Research Proximity to Partners

Think about the full scope of your supply chain as you shop for a new warehouse for business purposes. Is the spot you’re looking at close to major partners, suppliers, and distributors?

The more concise you can make these touchpoints, the faster your speed to market will be. This can reduce lead times, increase customer satisfaction and help build your brand reputation.

5. Think About Weather and Environment

Finally, don’t forget to consider the weather conditions that you might experience at your new location. If the area is prone to frequent storms, there’s a greater likelihood that employees will miss work, and your operations could suffer.

The same goes for any type of natural disaster, such as earthquakes or floods. These adverse weather events could cause structural damage to your warehouse and could endanger the lives of your employees. No market is hot enough to warrant this level of risk.

Find the Best Warehouse for Your Business Needs

Deciding to open up a new warehouse is a major step for any business. It signals that you have the resources to expand your reach and grow into new markets.

With the right space, you can bolster operations, add more employees to your team, and innovate your existing product lines. The best warehouse is one that facilitates those goals and checks all of the boxes on this list.

Looking for more advice on how to succeed at work? Check out our Business section!

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