How to rent a warehouse – a guide
Congratulations, if you’re reading this there’s a good chance you’ve started a new business or are in a position to expand your operations. As with any journey, it’s important to understand what to expect.
The demand for warehouses has almost doubled over the past decade, driven by the significant rise of e-commerce. If you’re looking to build a long-term strategy for growth, a warehouse makes perfect business sense; renting gives you greater flexibility and provides the ability to upsize as you grow. While using space designed for storage and often in a different location to where you might have an office or customer facing facilities, can enable faster delivery times and be more cost efficient.
Before you begin your search for a commercial unit, there are many factors to consider. This guide contains lots of useful information that will help you feel more confident about the process of leasing a warehouse – from finding your ideal space all the way through to moving in.
How to lease a warehouse?
1. Lease checklist
Firstly, find a warehouse space that works for you. For your lease to be strategically and commercially successful, it’s important to consider the following:
Finding the right location is key to any property search. Do you need to be near a central transport hub or motorway? Would it be more beneficial for your space to be surrounded by busy streets or in a remote location?
Consider which transport links are most important to your business. Fortunately, having a presence in and around cities all over Europe means that at Mileway we can help you keep the last mile short. This means our customers benefit from shorter drive times, larger populations and the ability to expand geographically when they’re ready.
Size & use
How much space do you need today and how much will you need tomorrow? The nature of your business will determine the type of space you want; whether it’s for storage and distribution, manufacturing or a mix between the two.
Start by creating a clear list of what you need to use the space for and what equipment you’ll need. For example, if you need to stack your storage up high, consider whether you’ll have enough room for specialist machinery like cranes to work freely. You may also need to allocate some office space to accommodate a few desk stations for your employees.
When it comes to manufacturing, think about how much room you need for heavy equipment, as well as any special needs like reinforced floors or high-volume power sources.
Consider how many loading doors you need for receiving and shipping goods. If you’re using specialist loading equipment, determine the height of the doors and whether you’ll need ramps. You may also want to consider loading shelters to minimise hot or cold air entering the warehouse.
You will also want to ensure your space has enough capacity to support your charging requirements. Whether you have fleet trucks, conveyors, automation, or specialist equipment, you will need to consider the placement of your electricity supply.
- Don’t forget to think about how much room you’ll need in the future.
- Higher spaces can offer much better value, as you only pay for the floor space used and not the height.
What does your business need? Consider the operations of your business and confirm with your landlord if you know you’ll need specific on-site facilities like car parking or loading doors for delivery.
We recommend exploring the area to make sense of what infrastructure is available to support you and your employees. Do you need a warehouse situated near shops, gyms, places to eat and drink and outdoor recreational areas? It would be good to also consider whether you need e-charger points, car parks or a good transport network available for employees to commute.
- Remember to check the permitted hours of use for on-site amenities.
- Check out the local street network to make sure you can access the site without any problems.
How long do you want to rent at your chosen location? Your business needs will likely change over time, so if you think your business will expand or downsize in the next few years, you may want a shorter lease.
How quickly do you need to be in? Plan in advance and make your landlord aware of your timescales. Allow plenty of time to sort out the legal documentation and secure any necessary consent.
- Don’t leave everything to the last minute. Otherwise, you might find yourself in a weak negotiating position.
- Factor in time to organise your equipment so it’s suitable for occupation.
2. Finance planning
How much can you afford? There are several other costs to budget for, including:
Rent: The monthly, quarterly, or annual cost of leasing a property. Direct debit is the most cost-effective and time-effective way to pay for your space.
Deposit: An upfront cost that you’ll need to pay at the start of your lease, along with the first month’s or quarter’s rent.
Business rates: The UK Government charges business rates on commercial properties, which is usually approximately 50% of the rent. Check to see if local or national government support is available to you. You may be able to apply for small business relief if your property’s rateable value is less than £15,000 – click here to contact your local council for more information.
Service and maintenance charges: An annual charge for upkeep of the communal areas of an estate, like landscaping and regular maintenance.
Dilapidations: This covers any repairs needed at the end of a tenancy and will be explained in your lease.
Legal fees: All parties will be responsible for their own legal costs incurred as part of the transaction. Bear in mind that you may need to factor in extra time for any third parties.
Insurance: Typically, the warehouse space will be insured on your behalf and then you’ll be charged for it. However, remember to sort out your own policies to cover other important elements like contents and public liability.
Repairs and maintenance: Whether you’re liable for internal and external repairs will depend on your lease agreement. Make sure you’re aware of what you’re responsible for before you sign the agreement to avoid unexpected bills.
Utilities: Just like you would at home, you’ll need to organise your own gas, electricity, water and waste supplies.
VAT: You’ll be charged VAT on all goods and services, including rent, service charge payments, and insurance re-charges, so make sure to allow for them in your budget. If you can reclaim VAT, then remember to have a cash flow shortfall while you recover any VAT paid.
3. What’s next?
Before you start the leasing process, give yourself a chance to ask the right questions and get an understanding of what the landlord will be like when you’re their tenant. Here are some good ones to start with:
- Does the lease include any break clauses?
- If you need to terminate your lease, what’s the notice period?
- What does the service and maintenance charge include?
- In what condition will I need to return the property at the end of the lease?
- How often do I pay my rent?
- Will my rent increase in the future?
- When is the earliest I can move in?
- What are the storage options outside my unit?
- Do I have designated parking areas?
- Will the landlord provide lighting or heating equipment?
4. Leasing process
Once you’ve decided on an industrial unit, the next step is getting your lease in place. Here’s what to expect:
Agreeing on the Head of Terms (HOTs): This will include all details of your lease and everything you have agreed up to this point. If you have negotiated something with your landlord either before or during your lease, make sure it’s included in your terms.
Some leases qualify for handling in-house, reducing the time and cost of putting a lease in place.
Complete the customer checks that will be sent to you: These will vary depending on the lease. At this stage, you may be asked to confirm your identity by providing your passport, proof of address or company financials.
Signing: Many documents can now be signed online, bringing your move-in date forward.
Keys: And last but not least! Once everything is signed and confirmed, you’ll receive the keys for your new property and can start doing what you do best.
5. Find a space that grows with you
At Mileway, we want your business to be a part of an ecosystem that allows customers to grow and succeed. That’s why we’ll help you scale your business and support your expansion into a new space, even if you still have time left on your current lease.
Mileway truly wanted our business to continue to succeed
Nick Jones, General Manager The Fulfilment Centre, Asendia UK
Why rent through Mileway?
No matter where you need to be, you’ll have access to our friendly staff and well-maintained properties. We also offer more than 6,500 commercial properties for rent across the UK as part of a portfolio that stretches across Europe, so you and your business can continue to grow with confidence.