6 Tips For Finding Industrial Property For Your Business
You’ve decided to ditch the 9-5 and pursue your dream of having a start-up business. You’ve got the grit, passion, and money. What’s the next step? Of course, you’re going to look at some places to settle and start your business empire. Kidding aside, you will have to find a place that wouldn’t eat up all your savings before you make some profits.
The difficulty of choosing an industrial location for your business is not the scarcity but the accumulation of many options. Because of all the options, finding the perfect property for your business can be difficult. Don’t worry because these 6 tips can help you decide where to establish a base of operations for your start-up.
Tip # 1 Buy or Rent
The first and most important question you should ask yourself is whether you buy or rent a property. Because start-up success is not assured, you must always have a safety net. Purchasing a business facility is rarely inexpensive, which will eat into your starting money. Investors can get anxious if you start using their money to acquire office space!
If you rent, you must agree that you will be responsible for a regular monthly payment. You will be limited in your ability to change and brand the space. To make the best decision for your business, consult your staff and investors. One of the most important decisions you’ll make as an entrepreneur is whether to rent or purchase.
Tip # 2 Location Analysis
The location of your start-up can have a significant impact on its long-term viability. It would be best to consider the location of your consumers and investors and where your crew resides. The industrial park setup eliminates this worry because it is a designated economic area encompassing complementary businesses.
If you operate a manufacturing or distribution business, an industrial park may be the place you’ll establish your business. Industrial parks most likely have complementary companies that operate warehousing spaces and transportation.
Tip # 3 Financial Impact
You’ll want to evaluate how each cost fits into your company’s profit and loss statements and balance sheet once you’ve figured out the various expenses associated with the chosen location. This is critical because your real estate represents the second-largest expense for industrial users after labor. You have to budget everything from new furniture to equipment and machines to determine your business’s long-term financial obligations.
Tip # 4 Operational Cost
In addition to the different economic factors mentioned above, industrial users should also examine possible assets from an operational standpoint. Manufacturers, distributors, and life science enterprises all have metrics to track and improve to determine how effectively their businesses operate.
These metrics include inventory levels, turnaround times, delivery times, product volume, assembly times, quality control, work safety, productivity, etc.
As a result, it’s crucial to determine which operational measures are most important to your company and how they connect to the physical environment. For example, you can choose industrial buildings with higher clearance if you want to maximize pallet placements.
Tip # 5 Net Effective Rate
The net effective rate is a metric expressed by brokers to make an informed and level comparison of your location options. This is the landlord’s rate, inclusive of free rent, the rental rate for the entire term of the lease, and tenant improvement allowances.
As an owner of a new business, you must compare the proposed economic terms of different potential properties. Additionally, the net effective rate offers you a quick method for comparing pretty similar properties.
That said, industrial space users must look for unique qualitative and operational characteristics before making a final decision. And determining the net effective rate can undoubtedly help you understand what your monthly and annual expenses will be for each property.
Tip # 6 Be Thorough
If you have already considered a location, be thorough in inspecting it before you buy or lease the area. Ensure that the building is structurally sound and there are no signs of damage or chemical spills. Industrial properties might be a little dirtier than other real estate types, so be sure the property is in good working order before committing to the sale.
You can also invest in a specialized inspection during the due diligence period if necessary. Before closing, also make sure to identify any current difficulties with the property.
Key Takeaway
When looking for an industrial property for your start-up business, you must consider a lot of aspects. Although finding an industrial space might be difficult, especially if you are a first-timer in the business industry. However, having the correct knowledge and expertise will help you succeed in establishing your business.
Before you start looking for industrial space, you should clearly understand your objectives and the qualities you demand. Remembering these tips will assist you in making the best selection for your company and make the whole process smoother.
