Extending the lease area

The surface area of the warehouse is central to effective company operations. It affects the availability of the stored goods, which directly translates into efficiency. When the current warehouse proves to be too small to meet the increasing demand, the tenant has to look for additional space. In this case, they might choose between two solutions: extending the existing area or changing the location altogether.


1. I choose to remain in the currently occupied warehouse park

If, having occupied the leased space for a certain time, the company finds itself in need of a larger space, as it becomes necessary for its effective functioning, it is crucial to examine the available opportunities within the currently leased warehouse. One solution might be to lease available units in the same building. If there is no such space available, and the investor is fully satisfied with the current location and lease terms, it is worth inquiring whether it is possible to build another warehouse.

Remember to check:
  • How much time is left before the current lease contract expires.
  • Whether it is possible to extend the currently occupied warehouse park.
  • How much time would it take to extend the warehouse or move to another one.
  • How much would it cost to expand the park, as well as to move the warehouse altogether.

2. I am looking for a new, larger warehouse

If the current warehouse space is inadequate for the company’s needs, and it is impossible to extend it, e.g. by constructing a new building, the investor has little choice but to look for another location. It is worthwhile to analyse the potential needs, as it should make it possible to determine whether the company should search for a warehouse that is already available on the market or develop a BTS space. In order to minimise the future risk of insufficient space, the tenant should specify the features which might be required of the building in the long term.

Remember to check:
  • How much space is necessary to ensure further growth of the company.
  • Whether any road projects are planned in the vicinity of the location.
  • What is the availability of skilled workforce.
  • What amenities are necessary for effective business operations in the given location.

Important:
  • A tenant searching for additional space should put considerable effort into conducting a proper analysis of their needs. The search for the right property should only begin after examining the results of the analysis.
  • The needs analysis should be conducted before the start of the renegotiation process or the search for a new building.
  • The lease rate should not be the deciding factor—it is worth to review all potential costs of the company operations in the given location.

Tomasz Mika