Warehouse Classifications 1010

Posted by Thomas Miller, CCIM

miller-industrial-properties-warehouse-classificationsNo matter which city you visit, spend enough time driving around and you’ll find a warehouse. They’re ubiquitous, big, wide, often surrounded by trucks. But despite these generic similarities, warehouses can actually vary quite significantly from one to the next. If your business uses one, or has plans to use one soon, a little education is in order. Understanding warehouse classifications, as well as a number of nuances relating to location, jurisdiction, flood planes, etc., is an important first step.

Warehouses are categorized into A, B and C classifications, with pricing and amenities differing greatly in the different classes.  The key to finding the best warehouse for your needs is zeroing in on the property that meets your needs – and nothing more – while also securing a competitive lease rate and tenant-favorable terms. That sounds tricky, but not if you’re partnering with the right team.

Here in northern Nevada, we have a massive inventory spanning from Reno and Sparks to Fernley, down to Carson City, Dayton and Minden. And yet it’s likely that of the available properties, only one will really be suitable for you. Finding it can be a challenge, but you’ll begin from a better position if you have a strong grasp of the type of warehouse you need.

Warehouse Class Awarehouse A

This class has the highest base rent and operating expense costs. It also has all of the bells and whistles in terms of technology and upgrades. Warehouses of this class are usually found in the most desirable areas, along with being REIT owned and professionally managed. They generally offer the most advantageous features – the tallest eave heights (30’ and up), highest density fire sprinkler systems, widest column spacing, most cost-efficient building systems, most spacious truck courts and most trailer parking spots, plus a very high dock count with cross docking.

Warehouse Class B

The B Class has a more moderately priced base rent and lower operating expense costs than class A, along with some of thewarehouse B same amenities. Locations are often in town or in the older parts of Sparks and Reno. Ownership is a mixed bag of REITs, regional investment groups and private investors, which means a few variables in terms of ownership and management quality. Eave heights are typically 24’ and column spacing is often slightly closer than class A. Fire sprinklers tend to be .33/3000 gpm, and ESFR is quite rare. Lighting may have been upgraded, but warehouse heating will likely be older. Truck courts are often shorter for class B, with partial use of the street required for 53’ trailers and fewer dock counts with front or rear loading only. Trailer parking spots are uncommon.

Warehouse Class C

warehouse CClass C is made up of the lowest priced locations. Unfortunately, many of these warehouses are functionally obsolete properties for modern logistical operations use. But for the right tenant, that’s not an issue. These warehouses are best suited for manufacturing operations that don’t require distribution features. Because these properties are not considered investment grade, they’re rarely owned by REITs. Instead, ownership is almost exclusively private investors, and property management occasionally can leave much to be desired.

Whether or not your business needs fall into class A properties or class C properties, a professional commercial real estate agent should consider your transaction of the utmost importance. If you find yourself feeling otherwise, remind yourself that your agent works for you, and you should enjoy prompt, professional, expert service from the beginning to the end of your work together. In Nevada, we invite you to contact us for assistance in locating the right commercial property for your needs.

One last tip before you decide you’re perfectly capable of scouting for warehouses online – read this first: “Think You Don’t Need a Commercial Real Estate Agent? Think Again.” As for calling off the real estate sign on the property, here’s our take: “The Hidden Trouble with the Landlord’s Real Estate Agent” first.

Our posts are intended to educate commercial real estate users so they can make better decisions in their real estate use, investments, buying and selling. We encourage your input and commentary. If you are enjoying these posts and finding them useful, help spread the word via Facebook, Twitter, LinkedIn, Google + or email with the buttons above.

About the Author

Thomas Miller, CCIM

Thomas Miller, CCIM is the president and broker of Miller Industrial Properties in Reno, Nevada. He has worked in industrial real estate since 1991, with 15 years of previous experience designing and building industrial warehousing and manufacturing facilities in the northern Nevada market. Contact Tom at tom@mipnv.com or 775-742-9891.

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