A Tenant’s Market

The Great Recession clearly has created a tenant’s market. The national average vacancy rate for bulk warehouse space topped 11.1 percent in 2009, the highest level in five years. Meanwhile, the national average rental rate dipped 1.3 percent to $4.57 per square foot.

That means it’s the perfect time to analyze your real estate needs, says Tim Feemster in the March issue of industry newsletter “Distribution Center Management.” Feemster is director of global logistics at Grubb & Ellis and also president of the Warehousing Education and Research Council.

“This is a great opportunity to do what we call blend and extend leases,” Feemster says. “Even with as much as two years left on a lease, you can make a deal.”

Thinking of shopping around for a better deal on real estate? Some factors to consider:

* Is it time? If you’ve plunked down a large investment in space or equipment in the past few years, it’s probably best to sit on your hands. But if your lease is almost up or your business has changed, start hunting for bargains.

* Discounts can be deeper for some. If you need specialized space or a large amount of space, your bargaining power might be limited.

* Trade up. Take advantage of lower rates to move from Class C to Class B space for the same price or less. The newer space is likely to boast higher ceilings and better sprinkler systems.

* Remember the big picture. It’s not just about the space. Consider transportation costs, staffing, and other issues.

Credit To NAI
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