For companies that have in-house logistics, one of the most complicated parts of corporate real estate strategy is devising a plan that serves distribution needs. Without a fully-optimized warehouse strategy, a company could fail distribution processes and significantly harm revenue. Finding the right distribution facilities is a four-step process, starting with diligent site selection:
Site Selection
Luckily, changing attitudes towards sales tax makes finding locations that are potentially tax-free to customers less of a factor. However, finding the right site is still challenging. A corporate real estate strategy has to balance many factors:
-
Multiple locations that are close to retail locations or customers, OR fewer, larger locations for greater efficiency and economies of scale.
-
Proximity to ports for accepting shipments, or proximity to geographically central locations.
-
Location near major shipping resources or location that's central for retail distribution.
-
Number of intermediate steps, if any.
All of these concerns determine which markets your company will include in its distribution and corporate real estate strategy. Once you've made these big-picture decisions, you can start looking at more traditional site selection factors like the availability of labor, adequate road networks and access to alternate transportation such as rail, water or air.
Property Amenities
The property's amenities are also an important part of selecting a location. Warehouses that are affiliated with 3PL companies can offer a range of additional services to support your company's supply chain. Properties that you will operate that are located in supportive developments can also benefit from the development's amenities. Services like access to fiber-optic data lines can help you integrate the warehouse into your company's IT system while highly visible building signage can help you build visibility for your brand. At the same time, finding a property with the right management and security can also be an important part of your strategy.
Configuration and Utilization
The configuration of your warehouse space will also have a significant impact on cost of occupancy. Factors like the number of doors and the warehouse's column spacing can impact how effectively you can use the space as much as the clear height or square footage. Most warehouses achieve utilization rates in the teens. While a higher utilization rate is possible, it frequently comes at the cost of significantly reducing employee productivity.
Try REoptimizer®'s Free Warehouse Optimization Calculator
Energy and Operating Costs
Along with the space's efficiency from a utilization perspective, its energy efficiency is also a major factor. Other than property taxes, lighting and climate control are frequently the most expensive operating expenses for distribution facilities. To this end, some companies are turning to LEED-certified buildings that use additional insulation or advanced HVAC systems to reduce climate control costs and have additional windows or skylights to reduce the cost of electric lighting. High-efficiency lighting fixtures, including LED units, can also significantly reduce operating costs.
Finding the right warehouse corporate real estate strategy to achieve your company's distribution goals is challenging. In addition to the many factors that come into any site selection process, the combination of technical aspects of the physical space as well as the need to integrate the space into a larger logistics strategy create a quantum leap in complexity. Creating a corporate real estate strategy that achieves distribution goals requires a vision, dedicated research and years of corporate real estate experience. Together we can find a solution that meets the demands of your company's revenue and logistics goals.
Commercial Warehouse articles:
