May 5, 2014 10:09:00 AM

Top 5 Worthwhile Tenant Improvements for Industrial Space

By Don Catalano

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tenant improvement, cre, corporate real estateWhile you might not be building out your industrial space with elaborate employee cafes or mahogany-lined board rooms, industrial properties need a tenant improvement budget, too. While much of what you put into your space will come in the realm of fixtures rather than TIs, going beyond basic lights and climate control can make your industrial space much more effective. Here are the best five types of tenant improvements that you can put in the next space you acquire for your company's portfolio.

Mezzanines

Many industrial spaces are built with a focus on maximizing clear height for greater cube efficiencies. This strategy is great when you need to store product and you can take advantage of very tall racking systems. However, there are also parts of your industrial property where the additional height gets wasted. Fulfillment areas, offices and delivery areas typically stay closer to the ground. Building mezzanine space to create a second level allows you to increase the effective area of your industrial space, letting those areas of the space do double duty for you.

Employee Break Rooms

Even if you are building a purely industrial space, having areas for your employees to take their breaks on-site and inside has multiple benefits. By keeping them on-site, you reduce the risk of them returning late from lunches or breaks. You also make it easier for them to work overtime if you end up being short staffed during busy times of year. Given that break rooms are usually simple to build -- especially if you aren't including a kitchen -- they usually won't consume a large portion of your tenant improvement budget.

 

Meeting Space

Meeting are a fact of life in just about every aspect of business, and workers in industrial spaces need to attend them, too. Whether you're getting a management team together or training your pick-and-pull workers on new quality assurance procedures, a dedicated meeting space gives everyone a place to get together and get on the same page. Meeting spaces can also double as places to work for visitors. If you include a mezzanine in your tenant improvement plan, it can be an excellent place to put meeting rooms without consuming floor area.

Reception Areas

In many businesses, the lines between offices, industrial facilities and retail outlets are blurring. Some customers opt to do pickups for items that would otherwise be delivered right from the warehouse, while some factories also allow for customers to get their items as they come off the line. Reception areas can also be useful for hiring and for hosting vendors or third parties. While an industrial reception area will likely not be as elaborate as an office lobby, it is still a useful tenant improvement.

 

High-Efficiency Lighting and HVAC Systems

Even if your landlord offers you a warm shell with lighting and HVAC in-place, allocating a portion of your tenant improvement dollars to upgrading your systems could pay off in terms of lower occupancy costs over time. Given the size of most industrial areas, utilities are a significant expense, making it easier to have efficiency upgrades like LED lighting or cooling systems that use outside air pencil out. When setting the terms of your tenant improvement budget, try to have any rebates that come along with efficiency upgrades applied to your expenditures, instead of letting the landlord pocket them as additional profit.

 

Here are a few other industrial articles to check out:

5 Secrets of Industrial Site Selection

Ways to Keep Your Industrial Costs Low

Six More Industrial Space Must-Considers

 

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Topics: tenant improvement, corporate real estate, commercial real estate, CRE

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Don Catalano

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