HOW TO ARRIVE AT THE COST OF AN INDUSTRIAL WAREHOUSE FOR RENT IN SINGAPORE?

 HOW TO ARRIVE AT THE COST OF AN INDUSTRIAL WAREHOUSE FOR RENT IN SINGAPORE?

Industrial warehouses in Singapore are extremely useful and vital for both small as well as large businesses. Their importance in the past decade and a half grew enormously thanks to many brick and mortar businesses rushing to include ecommerce as part of their business model.

However, the search for an industrial warehouse for rent in Singapore can be complicated. That’s because businesses especially those involved in manufacturing will need to factor in a number of aspects like the kind of space they require, where the warehouse should be located, and how well it can serve their needs. Also, will it serve simply for holding their goods stock or can also function as a fulfillment center?

The costs of an industrial warehouse for rent can also vary tremendously. The cost is dictated by factors like demand and supply as well as evolving market trends and business requirements. Businesses involved in ecommerce model are keen on having fulfillment centers within an industrial warehouse for it will allow them to reach out to customers swiftly in densely populated areas. As a result of this, demand for such warehouses has risen considerably, when compared to larger warehouses.

Add to this, the process for an industrial warehouse for rent are often made difficult by landlords and brokers who tend to use confusing and complex real estate acronyms and jargons to intimate their pricing options instead of explaining them in plain English.

WHAT FACTORS AFFECT INDUSTRIAL WAREHOUSE FOR RENT?

Generally, an industrial warehouse for rent is affected by three major factors.

  • FLOOR AREA: It is calculated in sf, which refers to the size of the warehouse that you are looking to rent.
  • BASE RENTAL RATE: It is generally SGD per sf. For instance, SGD 1.15 per sf, monthly, or SGD 12.00 per sf, yearly.
  • ESTIMATED OPERATING EXPENSES: It can be either CAM or NNN. And is often quoted in per sf or per OR e.g. like SGD 0.45 monthly, or SGD 4.50 annually.

While CAM indicates Common Area Maintenance, the common costs that is passed on by the landlord to the tenant. They generally include any kind of costs that relate to the management and maintenance of the industrial warehouse. Similarly, NNN means Net Net Net, also known as triple net lease. It relates to property, taxes, insurance, and other maintenance charges that an industrial warehouse tenant must pay in addition to their base rent, usually quoted on a per sq basis.

In majority of the cases, the landlords of industrial warehouses pass on the payment of base rent plus CAM or NNN. This is in addition to the operating expenses that need to be paid for the electricity bill for the industrial warehouse. 

Apart from the base rent plus CAM or NNN, there are several additional factors that could impact the eventual final rental cost. 

They include:

  • Maintenance which could include fire detection, computer networks, etc. Who organizes and pays for them?
  • Structural or system repairs. Who oversees the responsibility of arranging for repairs and eventual repairs cost? 
  • Broken equipments built into the warehouse. Who is responsible for getting them replaced or repaired? Who pays for them finally?
  • Safety costs. Who pays for the installation and maintenance of signage for safety which includes fire exit signs?
  • Space square footage. Is the tenant responsible for paying for the actual square footage of the industrial warehouse space including common areas, etc, used for operations?

Only after obtaining proper answers to the above queries, will you as the tenant be in a proper position to negotiate with the landlord and arrive at a fair and reasonable industrial warehouse rental cost and budget.

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