The 5 most important things to consider when leasing industrial warehouse space

Leasing an industrial warehouse space can be both exciting and daunting. Whether you are upsizing, downsizing or starting from scratch, leasing an industrial warehouse requires careful planning and negotiation. Whilst you will have numerous operational and logistical tasks to consider when signing a new warehouse lease, don't forget to consider these 5 critical items when navigating the process of leasing an industrial warehouse space.

1. Negotiating lease incentives

Understanding lease terms and negotiating effectively can help you secure a deal that aligns with your business goals. So, let's talk lease incentives!

Lease incentives come in many forms - rent free periods, periods of rent reduction, and fit out allowances are clever leasing techniques that may be used by landlords in a competitive leasing market to make their lease more attractive to potential tenants.

Lease incentives come with conditions, so know exactly what's being offered to you in that warehouse lease. Leases that include free rent periods may offer the free rent up front to offset fit out and moving costs, whilst others may amortise the rent-free periods over the length of the lease. It is important to negotiate these lease terms up front.

Ultimately, landlords want their tenants to succeed, and they want to continue to rent their industrial warehouse space out, so they are generally happy to negotiate mutually beneficial terms.

2. Outgoing and maintenance responsibilities

A warehouse lease often includes responsibilities beyond rent. Understanding your financial obligations helps prevent unexpected expenses.

Make sure you know what is included in the outgoings budget. Items in outgoings budget can include council rates, insurance, utilities, common area maintenance fees.

Alost be aware of what you are obligated to maintain that is not accounted for in the outgoings budget. Will you be required to maintain the air-conditioning, roller doors, etc.?

You may be legally required to pay for:

• Council rates
• Management fees
• Gardening and general maintenance
• Upkeep of communal areas (lifts, stairs, car park for example)
• Maintenance of installed equipment: air-conditioning, etc.

3. Connecting warehouse utilities

Ensuring the warehouse has the necessary utilities and infrastructure is crucial for smooth operations. Did you know it can take up to 6 weeks to connect internet at a new location? Most of us are reliant on phones and the internet to continue business as usual. The majority of warehouse management and stock management systems require an internet connection. 

When making your decision on the perfect facility be sure to check mobile coverage and the type of internet connection available in the area. Once you have signed your lease make connecting your utilities a priority. That way from the moment you move in it will be business as usual.

Before signing the lease, check:

• Availability of electricity, water, gas, and internet connectivity
• Whether the power supply meets your operational needs
• Environmental considerations, including waste disposal and sustainability features
• The process and costs involved in setting up or upgrading utilities

4. The effect of warehouse size on future business growth

It's important to consider the future growth of your business as commercial leases for industrial property tend to be for a longer term than normal residential leases.

Know your future goals and when and how you plan to achieve them. This isn’t just good business advice, but will also help you when negotiating your lease and deciding on how much warehouse space you need. Does it make sense to lease a small warehouse for a short term and then move into a larger warehouse? Or should you potentially sublease? uTenant can help you with your leasing strategy and search.

If you anticipate that you will grow out of your industrial space before your lease has expired, consider warehousing space that allows you to grow. Incentives can be used to assist you in gradually allowing for growth into a larger facility. It is important to note that you will have to commit to this growth for the landlord to offer these incentives.

Growth often happens suddenly and expansion needs to occur quickly. Ensure that you keep your landlord up to date with your expansion plans to have the best chance of their cooperation.

5. Notifying your current landlord before you move

If you're currently leasing an industrial warehouse, keeping track of that expiry date is vital. There are a couple of reasons why your lease end date is important:

• It can take a substantial amount of time to ready your property to meet your make-good obligations.

• You will need to give your landlord notice if you wish to end your tenancy. This stands even if your lease is ending. There is normally a clause in your lease that states how far in advance you must give notice, and it normally has to be in writing.

If you’re relocating, ensuring a smooth transition from your current lease is vital. You don't want to your move and business operations disrupted.

Leasing an industrial warehouse can be simple, if planned well

Leasing an industrial warehouse requires careful planning and consideration of a few key items. Partnering with the experts at uTenant can streamline the process by connecting you with suitable leasing options and helping you secure favourable terms that align with your business.

If you’re considering leasing an industrial warehouse, reach out to uTenant today to simplify the process and make informed decisions.

Updated: 4 February 2025