The complex equations behind how much different occupiers are able to pay.

We are pleased to launch the Australian Spotlight on the affordability of warehouse rents, in association with Savills UK Commercial Research, LondonMetric and supply chain consultants Hatmill. 

Despite current economic headwinds, occupiers are still competing for space and rents are being pushed above previous benchmarks. Investors, developers, and occupiers are rightly questioning whether rental levels are affordable and sustainable. 

A key aim of this paper is to provide greater analysis and discussion around the decision-making process, from an occupier perspective, on what factors are considered when companies are looking to take new warehouse space.

To examine this further, Hatmill has created a model, using anonymised data from their own consultancy work, which examines the cost base for parcel delivery companies, online retailers and traditional high street retailers. This segment of the market covers over 60% of warehouse take-up in the UK, similar to the Australian market.

As with all things real estate, location is critical, especially at a time of increasing overall costs. Occupiers will view rent affordability on a case-by-case basis in the context of how much throughput can be achieved in any given unit.

What factors need to be considered when looking to take new warehouse space and what factors influence site selection? What happens to an organisation’s cost base when rents rise in conjunction with other occupier costs? And how does rent remain a small part of an occupier’s total cost base?

Read our Spotlight here.