What it costs to rent a warehouse

Base rent: the number you are quoted

Most warehouse space is quoted as base rent, also called net rent: an annual rate applied to the area of the premises. The rate is annual even though you pay monthly, so the formula is simple: monthly base rent = rentable area × annual base rate ÷ 12.

The area matters as much as the rate. Usable area is the space you occupy on your own; rentable area adds your share of common areas in a multi-tenant building. Ask which one the rate applies to and how it was measured.

Base rent is rarely flat for the whole term. Many leases step the rate up at set points, so ask for the full schedule, not just the first-year figure.

Additional rent: the line that surprises people

On a net lease you also pay additional rent: your share of the building's running costs. It is estimated at the start of each year, billed monthly with base rent, and reconciled once actual costs are known, so you can receive a top-up bill or a credit months after the year ends.

• Operating costs: snow clearing, landscaping, common-area maintenance, routine repairs
• Property tax: the municipal tax on the property, allocated among tenants
• Building insurance: the landlord's policy on the structure
• Management fee: sometimes charged as a share of the other costs
• Your share is usually your rentable area divided by the building's total. Ask for the last reconciled year and whether capital items such as a roof can be passed through
• A gross or semi-gross quote folds some or all of these into one figure: easier to budget, harder to compare

Utilities, GST and the costs you carry yourself

Utilities usually sit on top of rent: electricity, natural gas and water, either separately metered or allocated by the landlord. Heating a tall space through an Alberta winter is a real line, so ask whether past bills are available.

In Alberta, commercial rent is generally subject to GST (5%), charged on base and additional rent. Alberta has no provincial sales tax. A GST-registered business can often claim input tax credits for the GST it pays; confirm with your accountant.

Outside the lease you carry your own insurance (commonly commercial general liability and contents, with the landlord as an additional insured), a municipal business licence if your business type needs one, alarm monitoring, internet and waste pickup.

One-time costs to get in, and to get out

The move-in bill is often underestimated. Budget for each of these:

• Deposit: often expressed as a number of months of gross rent; some landlords also ask for a personal guarantee or letter of credit
• Fit-out: office walls, a washroom, lighting, a power upgrade, plus any development or building permits
• Racking: purchase, installation and anchoring; high or dense storage is a fire-code question that can require permits
• Moving: trucks, crew and downtime
• Restoration: many leases require you to remove improvements and return the space to its original condition at the end

What makes one space cost more than another

Landlords offset some of these costs with inducements: a rent-free period, a fixturing period to build out before rent starts, landlord's work, or an improvement allowance. Inducements usually track the length of the term. Beyond that, these features move the price of a space:

• Size: small bays often carry a higher rate for their size than large buildings
• Clear height: more usable height means more pallets on the same footprint
• Loading: dock-height doors, levellers and a deep truck court
• Location: access to truck routes, staff and customers
• Age and condition: newer buildings bring better slabs, lighting, sprinklers and insulation
• Yard: fenced, paved outdoor storage is hard to find in many districts
• Power: heavy electrical service is costly to add, so space that has it is worth more to users who need it
• Term: a longer commitment can earn a better rate; a short one usually costs more each month

How short-term and flexible options are priced

Flexible arrangements use different pricing structures and usually cost more for the space you get, in exchange for a shorter commitment.

• By the day or for an event: a daily or hourly booking fee, often all-inclusive, plus a damage deposit. See renting by the day.
• Month-to-month: usually one gross monthly figure, no inducements, and rent that can change on notice. See month-to-month space.
• Shared warehouse: a monthly fee for a defined area or number of pallet spots, sometimes with shared equipment included. See shared warehouse space.
• Pay-per-pallet: a 3PL or public warehouse typically charges storage per pallet position per period, plus handling in and out and other activity fees. See pay-per-pallet storage.

Work out your own number

Once you have a quote, put it into the monthly cost calculator to turn area, base rate, additional rent and GST into one monthly figure you can compare.

If you are renewing, or were quoted a rent some time ago, the rent check tool indexes a past rent forward using the Statistics Canada industrial rent index, and the market page shows how that index has moved. An index tracks average change across many properties, not the rent for any one building, so treat it as a sense check rather than a price.

Ask for these before you compare quotes

• The base rate, the area it applies to, and how that area was measured
• The rent schedule for every year of the term
• The current additional rent estimate and the last reconciled year
• What operating costs exclude, and how capital repairs are handled
• Whether utilities are separately metered, and past bills if available
• Inducements: rent-free period, fixturing period, allowance or landlord's work
• Restoration obligations at the end of the lease
• Whether GST applies to every line in the quote