9 Things to Consider When Choosing a New Warehouse Location

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Choosing the perfect location for a new warehouse can be very challenging. This decision can impact productivity, delivery deadlines, costs, and customer satisfaction, which are essential aspects of the business. 

Whether you want to outsource with a trusted warehouse or operate your own, the challenges are the same. You need to ensure that you can provide fast shipping, have an interrupted delivery process, and have access to a skilled workforce. If you struggle to make the best decision for your company, our tips will help you. This article shares the crucial factors that will impact overall business practices. 

Customer Base

Being close to your customers is crucial when choosing a new Charlotte warehouse location, for instance. This helps you establish a streamlined delivery process that meets refined requirements. Today’s customers want the goods delivered as soon as possible, so positioning the warehouse close to them helps speed up the process. 

Despite cutting down on costs, this step will increase customer satisfaction and provide more affordable shipping. For example, if your customers are located in the Pacific Northwest, you would want to establish a facility in that area. For a business that has customers in North America, having a few different warehouses near the transportation hubs works best.

Suppliers 

Being close to the suppliers is as important as being close to your customers. This helps reduce the transportation and inventory carrying. On the other hand, having your suppliers close minimizes the risk of delays in transit. 

Establishing a warehouse near your suppliers is essential for international and domestic partners.

Foreign Trade Zones

When looking for the perfect location, keep in mind that some bring more benefits to your business than others. Companies that use foreign trade zones have greater visibility, tax relief, and elimination of duties. This is crucial for businesses that have raw materials or components sourced from outside the U.S. Do detailed research to find out more about the FTZ in the required area to see if this can benefit your business. 

Proximity to Transportation

A business should establish a warehouse near the most commonly used transportation methods. Whether you transport your goods by train, ship, plane, or truck, you must be close to the facilities for a streamlined and efficient process. Customers want to receive the goods quickly, so being close to your transportation services is one thing to consider. Being close to the port is crucial if you ship your goods through sea. This helps reduce the moving costs, and you can ship more containers in a short period. For e-commerce businesses, you should be close to the parcel hubs. If you work with less than truckloads of shippers, they should be located near your warehouse. However, finding the ideal place can be difficult, and you might not always position your warehouse near your transportation hub. In such cases, you should look for easy access to the major roadways leading to the transportation hubs. Ideally, the ideal warehouse should be located centrally, easily connecting with carrier suppliers and customers.

Building Availability

You might have done thoughtful research and identified the perfect location for establishing a warehouse. You might have your customers and suppliers close to you. However, one thing can limit you, and that is building availability. If facilities aren’t available in your selected area, you won’t have a chance to establish your facility even if you are ready to pay more.  

However, you should also consider the scalability of the chosen warehouse. At this moment, it might perfectly fit your current business needs. But don’t forget that your business will grow in the following years, and the facility should accommodate that. Otherwise, you will be obligated to look for a new warehouse and move your operations there, which increases the costs. You might have established a warehouse in a competitive area, so no other warehouses will be available to accommodate the growth. This is a part of the challenges when moving to a warehouse in a competitive area. However, this doesn’t have to deter you from doing it if it aligns with your business practices. We would like to encourage you to think long-term when choosing the correct location. 

Urban warehouses are usually more competitive due to their unique advantages. They are easily accessible for the workforce and available for customers, so businesses rely on them. However, this can result in less availability. 

Lease Rates

The warehouse cost is another crucial aspect for businesses that want to move to a new location. The warehouse cost can impact the final product cost, so this should be part of your strategy. In addition, we would like to discuss two different situations so you can understand the outcome. High-cost markets will have higher lease rates. Expect to pay more for warehouse space in high-demand areas such as San Diego, Long Island, and San Francisco.

On the other hand, you can pay less in Atlanta, Dallas, Fort Worth, and Memphis. However, it isn’t all about the leasing rates since there is more to choosing the perfect location. However, we should highlight the current situation in the warehouse market. The cost per square foot in the U.S. is rising as a result of less capacity and a high volume of online sales. With this situation, the demand for warehouses is on the rise. Despite having high lease rates, the popular areas will have less available space.

Tax Structures and Incentives 

The tax structures and incentives will impact your overall business costs. First, you should consider the business-related taxes, such as franchise inventory, that are implemented in that area. Also, you shouldn’t forget about personal taxes such as property, rate, sales, and income taxes. This will affect you and your employees. Business owners should look for areas with tax incentives, which help reduce warehouse costs. For example, Nevada and Mississippi have tax relief and business incentives that can be beneficial. It would be best to continually research the local incentives and tax structures so you can assess whether that location is feasible for your business.

Environments and Restrictions 

Natural disasters can delay your delivery process, so it is important to assess that area. The local conditions will affect the building requirements of your warehouse to ensure structural integrity. Another thing to consider is the truck access and roads. These areas are more prone to road congestion, and peak traffic hours vary in different locations. These factors can impact shipping, so you need to take a thoughtful approach. Some areas might have time restrictions on truck pickup and delivery, so you must see whether this aligns with your business operations.

Workforce Availability

 Another factor to consider when locating your warehouse facilities is the available workforce. This requires a strategic approach that relies on analyzing the area. We know that warehouse employees can be full-time or temporary, which raises further concerns for companies. 

The latest industry trends showed that the workforce pool is narrowing, which leaves companies with many options to battle this. They try to face the changes by offering benefits, flexible scheduling, and higher employee wages. Therefore, workforce availability is another priority when choosing a new warehouse location. 

Are there skilled workers close to your facility? If not, will the transportation costs to get them to the workplace be feasible in the long run? You need to consider these questions when establishing a connection between workforce availability and warehouse location. For example, the urban warehouses have access to a large workforce pool. The metropolitan areas have high population density and public transport, which makes it easier for companies to source employees. However, establishing a warehouse in urban areas can be costly. Should you place your warehouse in an urban or rural area? There is no one-size-fits-all answer, as you need to choose according to your business needs. Make sure to analyze the area where you plan to establish your warehouse in terms of demographics, education, and city income levels.

Conclusion

Choosing the right location for your warehouse is a process that requires detailed analysis and thoughtful planning. First, you must analyze your business needs to develop a solution that fits them. The optimal warehouse location should provide streamlined delivery, cost efficiency, enhanced customer satisfaction, and access to the workforce. When assessing a specific area, consider all the factors. There might be no perfect choice out there, and you might need to be ready to compromise. The high lease rates in some areas might not seem like the right step. However, it would be feasible if freight transportation costs were reduced. 

I'm Allison Dunn,

Your Business Executive Coach

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