Signing a warehouse for lease means you’re committing to 3-5 years typically, sometimes longer, and mistakes can be incredibly expensive to fix. Unlike an office lease where your biggest concern might be paint colors and carpet, warehouse leases involve structural elements, equipment compatibility, and operational factors that affect your ability to actually do business. The average warehouse lease costs between $4-$8 per square foot annually depending on location and features, which means a 50,000 square foot facility runs $200,000-$400,000 per year before you add utilities, insurance, and operational costs. Getting this wrong doesn’t just cost money—it can cripple your operations for years.
Lease Structure Matters More Than You Think
Triple net leases (NNN) are common in industrial real estate, which means you pay base rent plus property taxes, insurance, and maintenance. This differs from gross leases where those costs are included. A property might look cheaper at $5 per square foot NNN until you realize taxes, insurance, and maintenance add another $2-$3 per square foot.
Ask for a detailed breakdown of additional costs for the past 2-3 years. Property taxes can jump if the property gets reassessed. Maintenance costs vary wildly depending on building age and condition. An older building might have cheaper base rent but eat you alive on maintenance and utility costs.
CAM (common area maintenance) charges apply if you’re in a multi-tenant facility. These cover parking lot maintenance, landscaping, shared lighting, and common facility repairs. CAM can increase yearly, and some landlords have been known to inflate these costs. Ask if there’s a CAM cap written into the lease to protect against excessive increases.
Building Specifications Need Deep Investigation
Don’t just accept the square footage number in the listing. Measure or verify usable space versus total space. Column placement can make 50,000 square feet feel like 40,000 if they’re poorly positioned. Walk the space with your operations team and actually map out where racking, workstations, and equipment will go. You might discover the layout doesn’t work for your operation.
Loading docks deserve serious attention. Count them, measure them, and check if they’re dock-high or ground level. Dock-high is standard for most operations, but if the listing shows ground-level doors, you’ll need ramps or lifts, which adds cost and slows operations. Check if dock levelers are included or if you need to install them.
Ceiling clear height gets listed, but confirm it’s measured the same way you’re thinking about it. Some landlords measure to the bottom of trusses or beams, others to the deck above. If you’re planning high-bay racking, you need actual usable clear height, not just technical ceiling height. A few feet difference can mean an entire level of racking you can’t use.
Utility Capacity Isn’t Always Obvious
Electrical service capacity must match your operational needs. A typical warehouse might have 200-400 amp service, which is fine for basic operations. But if you’re running automation equipment, refrigeration, or heavy machinery, you might need 800-1200 amps or more. Upgrading electrical service can cost $50,000-$150,000 depending on how far the building is from adequate utility infrastructure.
HVAC requirements vary by what you’re storing. Electronics, pharmaceuticals, and certain foods need climate control. If the space doesn’t have adequate HVAC, installation gets expensive fast—potentially $10-$20 per square foot. Even if you don’t need full climate control, some temperature regulation might be necessary to protect inventory from extreme heat or cold.
Internet connectivity matters way more now than it did even five years ago. Most warehouse operations run on cloud-based systems that need solid internet. Check what’s actually available, not just what the landlord says is “available.” Some industrial areas still only have DSL or basic cable internet. Fiber is ideal, but even quality cable internet can work for most operations.
Lease Terms and Exit Strategies
Renewal options need negotiation upfront. A 5-year lease with two 5-year renewal options at fair market value sounds reasonable until you realize “fair market value” could be anything. Try to negotiate fixed percentage increases or at least a cap on renewal rates. Some tenants successfully negotiate rights of first refusal if the landlord wants to sell the property.
Sublease rights matter more than most tenants think. What if your business changes and you need less space, or you decide to relocate? Many leases restrict or prohibit subleasing, which leaves you paying for space you can’t use. Negotiate for sublease rights with landlord approval (not to be unreasonably withheld).
Early termination clauses almost never exist in warehouse leases, but it’s worth asking. More realistic is negotiating a contraction option that lets you give back part of the space after a certain period if you pay a fee. This provides some flexibility if your business shrinks or you find efficiencies that reduce your space needs.
Hidden Costs That Surprise Tenants
Property insurance for warehouses costs more than office space insurance, especially if you’re storing high-value goods or hazardous materials. Ask the landlord what their insurance requirements are and get quotes before signing. Some operations pay 2-3 times what they expected for insurance because they didn’t check requirements upfront.
