5 Warehouse Occupancy Costs Tips

Major online retailers have greatly changed customer expectations regarding the speed of shipping when buying from any business. To meet the demands for faster shipping, many companies are establishing warehouses in new locations, leading to increases in costs.

Whether you're expanding, already operating multiple locations, or working out of one warehouse, taking steps to manage your occupancy costs can positively impact your bottom line. Here are some tips to help keep costs under control:

1. Store as much as possible vertically

Warehouse space is rented by the cubic foot. You're wasting money if you don't stack items as high as feasible in your space. Examine how well you're utilising all three dimensions of your warehouse and search for ways to move storage vertically to fit more in less space.

2. If it's possible, go for the long term.

If you're in the middle of a lease, try to renegotiate with your landlord. In exchange for extending the term, you might be able to get a significant reduction in rent. When renting a place for the first time, going for a long-term lease gives you more negotiating power to get a cheaper base rental fee. Of course, you'll need to balance your need for flexibility and your desire to reduce occupancy costs. In some cases, your need to shrink, expand or relocate your warehousing may be so great that you can't afford to be locked into a long-term agreement.

3. In cold climates, invest in a heat recovery system.

The material-moving equipment in a warehouse generates a great quantity of heat. You may put it to good use with a heat recovery system. Thermal energy emitted by machines is absorbed and diverted to other areas of the warehouse, such as offices and breakrooms, using this type of HVAC system. This helps you to heat these spaces more efficiently throughout the chilly winter months, lowering your utility expenses.

4. Think about relocating to an unusual location.

The location of your warehouse has a significant impact on your occupancy costs. In areas where demand is high, you'll pay a premium base rent rate. By relocating to a new area, you may be able to slash the amount of rent you pay. One option is to consider converting a vacant retail space into a warehouse. Many large online retailers are using this trick, snatching up empty department stores in shopping malls across the country. With many stores having shut due to COVID-19 shutdowns, you may find a glut of vacant retail space in your area.

5. Use Public Warehousing as a supplement rather than expanding to accommodate seasonal storage

If your business is primarily seasonal, leasing a warehouse large enough to accommodate all your inventory may not be a good idea. This is particularly true during the busiest season. Instead, consider renting a warehouse with slightly more capacity than you require during the slowest season. The extra seasonal inventory can subsequently be sent to a public or contract warehouse or kept on-site at your retail locations.

Source: Don Catalano www.ReOptimizer.com

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