High prices for industrial real estate force tenants to increase operational efficiency

by   CIJ News iDesk III
2021-10-07   13:19

The current situation on the domestic industrial market, during which there is practically free storage capacity and prices are attacking historical highs, is forcing more and more companies to not only increase their efficiency per square meter, but also focus on reducing operating costs of their warehouses. So if corporate tenants have not moved into modern warehouses with the latest technologies, they have several options to reduce the cost of their operations.

Increase operational efficiency
The aim of increasing the efficiency of operation is to make the most of the payment per m2. As rental prices hit their historic highs, tenants are looking for ways to make the most of the area. One of the steps is definitely the automation of the movement of goods in warehouses. Furthermore, it is advisable to consider renting warehouses with a higher clear height, which allow you to either store on more floors, or of course divide the space in height using mezzanines, and thus increase the floor area. Also popular are the so-called VNA (very narrow aisle), or very narrow aisles with an automated system for loading goods in the warehouse.

"For businesses with lower margins, such as forwarding or logistics, increasing the efficiency of industrial real estate operations is a way to save on rented m2. On the other hand, the brake on the development of automation is often a higher level of investment and its length of return. It is therefore important to have a well-calculated whole project economy, which due to extremely rising rental prices may become more feasible than in the pre-pandemic period," says Petr Narwa, Head of Transaction & Consulting Services at Prochazka & Partners.

Reduction of operating costs
The second key area in which tenants can look for savings is the issue of operating costs and their reduction. Most of the expenses fall into the area of ​​working with energy - this can be combated both by preventing heat leaks (installation of insulation or heat gates in front of loading bridges) and energy self-sufficiency.

"The price of energy on energy exchanges is rising by tens to hundreds of percent. The tool to combat this trend is certainly energy self-sufficiency in the form of solar panels on the roof, geothermal wells, heat exchangers or just the use of a zone system of LED lighting. The energy label of the building will definitely indicate before signing the lease agreement how the building or project is energy efficient. However, the goal should be to reduce the energy dependence of the warehouse or production hall on external suppliers," adds Narwa.

Author: Prochazka & Partners