3 May 2023 By Aaron Barker, Head of Sales
IN BRIEF:
Average Warehouse Costs and How to Budget for Them
With any construction project, accurately forecasting the costs involved – and then staying approximately within your budget – is a strong indicator of success.
Getting a first-class structure with the finest possible finishes isn’t the best result if it means you have taken on debt you weren’t prepared for, or that you have to compromise on other business growth plans while you recover from the capital investment.
And if you overcapitalise, you may never see a return on investment if you sell the property.
Likewise, cutting corners at every turn and ending up with a warehouse that is too small or not set up properly for your business isn’t a success either. You might have stayed within budget but your day-to-day operations are now hampered by unnecessary cost-cutting, stifling business growth.
The best path forward when looking at building a commercial warehouse is to spend ample time in the research, budgeting and design stages. Design, planning and permits are the lengthiest stages of the build, and accurate costings can’t be done until the design is complete.
Embarking on your project with strong knowledge of the costs involved will set you up for success, so if you want to build in a year’s time it’s important to start the process now.
“Far too often we see people spending excessive amounts on inefficient structural designs, which then have to be re-engineered and streamlined, adding more time and money to the project. Structural design is one of our strengths, so contact us early to ensure you get an efficient design from the beginning,” says Aaron.
Building a warehouse is not a simple undertaking: a large, complex project requires a thorough understanding of the costs involved. The last thing you need as a business leader is to have to manage unforeseen costs once you’re already committed to your building project, so understanding the numbers is key.
Additionally, knowing which costs may fluctuate more than others will mean there is less chance of unwanted surprises.
The cost of steel, for example, is one area where market forces and the global market influence the cost, and this can vary from month to month. Transport costs are also at the mercy of fuel prices (which we all know can oscillate by the day).
The best way to manage variable costs is to ensure you leave some breathing room in your budget, and always seek financial advice to ensure you’re taking on a manageable level of debt.
Below are some suggested items to include in your commercial warehouse budget. Each of these can vary enormously depending on your site, council regulations, and the size and application of the building itself (for example, engineering the structure to support a gantry crane).
This is definitely not an exhaustive list, but it should provide some structure to help you lay out the costs for your project.
1. Design and Certification
2. Civil Works
3. Building Works
4. Services and Connections (Water, Gas, Power, Data)
5. Fire Services
6. Land Cost
7. Other Potential Associated Costs
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At the beginning of this article, we stated that the cost per m2 to build a warehouse is around $3,000 – $3,500 for a full turnkey build. This of course is a ballpark figure and can vary considerably depending on how much pavement area needs to be laid, the structure of the building, cladding choices, features like awnings, and a range of other factors.
We also offered an estimate of a structural kit of $500 – $700 per m2 (installed). Steelcorp’s kits are custom designed for every project, so this figure is a guide only.
If you’re on a tight budget, we have written a guide on reducing the price of your shed, but ultimately we aim to help you get the best value structure that is fit for purpose and returns positive ROI for your business.
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