Finding Additional Plant and Warehouse Space is Easy!
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Recently, we explored ways to find additional office space within your building. If you missed the column - you can quickly catch up by clicking the link below.
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We’re lacking space, so now what?
In today’s super competitive, hyper tight industrial market - moving an operation is problematic as a relocation target may not be available. Not to mention - moving is expensive, inefficient, and the pay back to your company may be many years. Alternatively, many groups simply cannot move. Reasons given? Owned are the premises, special permitting may be in place, proximity to employees, a lease which doesn’t expire for several years and so on.
But if your operation needs more room the regardless of the reasons above, space must be found. Today I’ll share a few ideas as to how.
In our experience, many operations believe they’re out of space when in reality a bit more can be found in an existing location.
Add a production mezzanine: A production mezz can be a great way to increase production square footage without consuming floor space. If you own your location, add machinery or processes, look into this solution.
Store some finished product or raw materials outside: Subject to city ordinances (if outside storage is allowed), a yard or a secured area outside multiplies your usable square footage.
Lease additional space close by: Whether you own or lease your location, a temporary fix to your space needs may be accomplished by leasing space down the street. But be forewarned - you may create inefficiency. Certainly the upside to this strategy is that the excess space (if the lease is flexible) can be discarded at the lease expiration (if the space is no longer needed) or renewed until a more permanent solution can be achieved.
Outsource a function to another producer: This solution is potentially costly and should be compared to moving and keeping the function in house. Some economies can be achieved however if the function is new (and the upside unknown) or the barriers to entry are formidable.
Separate a portion of the operation and relocate that portion: Once again with full acknowledgement that the main reason I see for companies "relocating" is the inefficiency created by operating from multiple locations - in some cases it works and can solve a space issue. The best example that comes to mind is a client of ours. Needed was an upscale office image combined with a plain vanilla warehousing function. The two were diametrically opposed and unattainable in one building. We discovered a solution! Relocate the office into an owned location and leave the warehouse at the existing location - space issue solved.
Use a third party logistics company: Also known as a 3PL, these independent warehousing providers serve as an outsource for all of your warehousing needs. A third party logistics company provides a "soup to nuts" solution for additional warehousing. Included in the per pallet charge is warehousing, access, shipping and receiving, insurance, etc.
Add building square footage to your location: This solution would only apply if all of the following criteria exist - you own your location, the site is large enough to accommodate additional square footage, and the city will allow additional square footage to be constructed. If all of these apply, congratulations! You managed to foresee your growth and planned accordingly.
Utilize cube by reworking your racking plan and purchasing a swing reach forklift: Every time you modify your aisles in to a narrower configuration, you gain approximately 33% increase in pallet storage density. Therefore moving your wide aisles to narrow aisles, increases storage density by 33% and moving from narrow aisles to very narrow aisles, you save another 33%. Of course this increased storage capacity comes at the price of increased capital investment in lift trucks and pallet rack. A quick and easy tip to help evaluate if you can increase your storage space in your current building is to stand at one corner of the warehouse and look out at the opposite corner. If you can see the opposite corner without obstructions, you likely have an opportunity to increase storage cube using increased investment in materials handling products. Commodity class, stacking height and sprinkler calculation must be considered before you go vertical.
Add another shift or two: We have clients who have prolonged moving for several years by adding a second and then a third shift. Generally, the advantage of the second shift is that most overhead (rent, exec salaries, benefits, etc.) are covered in the business generated by the first shift. The second and third shift become very profitable as a result.
So, there you go. More space than you knew existed.
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at email@example.com or 714.564.7104. His website is allencbuchanan.blogspot.com.