The true cost of warehouse storage involves various aspects. Whilst the specifics may vary based on the industry (of the inventory) and location (of the warehouse), generally, the four main elements that cover the true cost of warehouse storage are occupancy, labour, equipment, and inventory.

When you start to break all of these down into real costs you begin to understand that when these areas are not fundamentally prioritised for your specific storage space, operating your warehouse can get very expensive, quickly. There are:

> Occupancy costs: This includes the rent/lease expenses, property taxes and all utilities.

> Labour costs: The cost of the personnel involved in managing, operating and maintaining the warehouse.

> Equipment and technology costs: This covers material handling equipment, warehouse management system (WMS) and any other technology, as well as the security system.

> Inventory costs: This includes expenses relating to holding and storing inventory, such as insurance, the cost of any product losses/theft, and of course costs related to the physical handling, storage and organisation of inventory.

Understanding and managing these four main elements will help you optimise the true cost of your warehouse space, enabling you to manage your warehouse storage better.

Don't pay for space you don't use

Warehouse space requirements often experience fluctuations throughout the year due to seasonal variations in demand. Throughout the year, you may find you need immediate additional short-term storage for an influx in inventory (for example, in the lead up to Christmas peak trading). Inversely, during slower periods of trade when stock levels have depleted you have surplus space in your warehouse.

In both cases, managing these peaks and troughs effectively is crucial for optimising storage costs and maintaining operational efficiency. To put it simply, you only want to pay for the space you need and use.

When it comes to managing your surplus warehouse space or overflow storage requirements efficiently, there are a few options that could save your business lots of money. In this article, we'll cover subleasing property and overflow storage.

Subleasing warehouse space

First, let's look at subleasing warehouse space. This option works in both scenarios - looking for additional warehouse space, and looking to monetise your surplus warehouse space.

If you own a warehouse and find yourself with surplus warehouse space, leasing part of your warehouse to another party could be a viable option. If you are leasing a warehouse and no longer require all the space for your operation, check whether you have a sublet clause in place within your lease agreement.

With leasing now the more affordable and efficient option for many businesses and industries, subleasing provides a more flexible and scalable option during transitional growth or decline phases. Subleasing allows tenants to adapt to changing needs whilst optimising costs and maintaining control over their leased space.

If you have surplus warehouse space you are no longer using, don't let it eat into your pockets. Subleasing the unused space to another tenant could be a suitable option for you - reach out to us today to discuss your options. uTenant does the hard work for you and sources a tenant to fill any surplus warehouse space you may have.

Short-term and long-term overflow storage space

If you find yourself in a position where you have more incoming inventory than you have space to store it, sourcing overflow storage from an external provider offers various benefits including flexible capacity, quick implementation, risk mitigation and cost savings.

By leveraging external overflow storage, you can optimise storage solutions, adapt to changing demands, and efficiently manage inventory without the constraints of owning or leasing additional warehouse space. A Third-Party Logistics (3PL) provider can be an excellent option if you require short-term or long-term overflow storage.

Choosing a 3PL provider for overflow storage

By partnering with a 3PL for overflow storage, you can leverage the provider's infrastructure, expertise, and technology to optimize their storage and logistics processes efficiently. This collaborative approach allows for a more agile and responsive supply chain.

There are several reasons why a 3PL provider is a good choice for managing your overflow storage requirements:

> Flexibility and scalability: 3PL providers offer flexible storage solutions that can be easily scaled up or down. This flexibility is crucial for handling overflow storage during peak seasons or sudden increases in inventory.

> Cost efficiency: You only pay for the storage space they use, avoiding the expenses associated with maintaining and managing a dedicated warehouse.

> Avoidance of capital expenditure: Avoid significant upfront capital expenditures related to building or expanding warehouse facilities by outsourcing overflow storage to a 3PL provider. This allows for better allocation of resources.

> Expertise in logistics: Leveraging their expertise ensures that the overflow storage is efficiently organised, managed, and integrated into the broader supply chain.

> Scalable services: Many 3PL providers offer a range of scalable services such as order fulfillment, packing, and shipping. This integrated approach allows you to streamline the entire logistics process.

Find the right solution for your requirement

Don't risk excess costs and disruptions to your supply chain. By using uTenant to help find the right solution to you manage your surplus warehouse space and over storage requirements, you are putting yourself in the best position.

uTenant's online property and warehouse matching platform connects those looking for warehouse space with those who have it. Behind the technology sits our team of warehouse experts who have operational experience in supply chain and extensive knowledge in industrial property.

From one month to 12 months or more, right across Australia, uTenant will find the right space to suit your specific business needs. We can assist you with:

> Long-term property leasing

> Short-term to medium-term subleasing

> Short-term to long-term overflow storage

> Short-term to long-term logistics contract with a 3PL provider

If you find yourself either with surplus space, or requiring overflow space, join the uTenant ecosystem today and let us connect you.

Don't just take out word for it...

Updated: 5 February 2024