Most companies nowadays are using eCommerce and therefore need storage space. One kind of storage option is building your own warehouse. Alternatively, you can start a business offering warehouse space for local businesses. No matter what your need, investing in a warehouse can be a smart financial choice.
All other things being equal, the cost of building a warehouse sits at about $25 per square foot. For a small 30×30 foot warehouse, that comes out to approximately $25,000. A large 60,000-square-foot distribution center can cost upwards of $1.5 million or more.
These numbers are just estimates. The actual cost depends on several factors, including the location, building materials, permit requirements, finishes, flooring, and other complexities of the building. Also, the majority of warehouses in the United States are very large businesses, so those costs might not reflect the average cost for small businesses.
So we put together this comprehensive guide on warehouse building costs.
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Warehouse Building Costs
The cost of building a warehouse is expected to rise in the coming years due to increased demand for steel and problems in supply chains around the world. However, steel is not the only cost behind a warehouse. Aside from labor, the most relevant factors that determine costs for building a warehouse are
- Location
- Size
- Freight
- Accessories
- Local Codes
- Excavation
- Construction types
- Utility arrangement
- And more
Building a warehouse is a large financial investment. So, make sure that you carefully consider your needs and assess your project accordingly.
Materials Used in a Warehouse
Metal
The most common material used to make the structural skeleton of warehouses is steel.
Steel is a lightweight yet very strong metal that is resistant to corrosion, rust, and other kinds of weathering and damage. Steel is also relatively cost-effective compared to other metals. The general load-bearing structure of the warehouse will be made of industrial steel.
Plastic
Most of the time, the walls of warehouses are made of corrugated plastics. Plastic is cheap to make, easy to install, and provides reasonable protection from rain and other elements. Plastic is probably the most abundant material used when making a modern warehouse.
Fiberglass
Most modern warehouses incorporate fiberglass into their ceilings. Fiberglass is a lightweight durable composite that has good tensile strength and is easy to replace. Fiberglass is also slightly translucent so it can let light into the warehouse.
Wood
Wood is not commonly used for warehouse structures because it is very heavy and cost-prohibitive compared to other materials. Some warehouses might have wooden floors and other wooden fixtures. Wood may also be used for internal shelves and other storage areas but it is generally used in the walls or the ceiling.
These are the 4 major materials, but warehouses will use other materials such as PVC, concrete, glass, rubber, and more. The total number of materials depends on the complexity of the unit. For example, a bare-bones metal warehouse without any climate-control structures uses few types of materials compared to a completely climate-controlled warehouse for perishable products like food.
Types of Warehouse Costs
There are 4 major types of warehouse costs
- Hard costs
- Soft costs
- Long-term costs
- Financing costs
Hard costs include all the physical “stuff” of the building, including materials, labor, electrical installation, plumbing, roofing, foundation, parking lots, HVAC systems, and any other fixed installation relevant to running the warehouse.
Soft costs include all those things relevant to the construction of the building that is not related directly to the physical structure itself. Things like permits, certifications, legal fees, manufacturer and architect drawings, interior equipment, warehouse equipment (e.g. forklifts, dollys, etc.), and any other items.
Long-term costs include all costs related to running a warehouse, such as utilities, maintenance, and upkeep costs. Some warehouses have much fewer long-term costs than others.
For example, a bare-metal shell warehouse will not incur as large an electricity bill as a warehouse with electricity and a climate-controlled interior. Long-term costs are also affected by things like insulation and materials lifetime.
Financing costs are the last major category and include all costs related to securing financing for the building. Mortgage fees and interest rates are the primary financing costs you’ll have to worry about when building a warehouse.
Prefabricated vs Constructed Warehouses
There are two major types of warehouses you can pursue: prefabricated or constructed warehouses. Prefab warehouses are the cheapest warehouse option and essentially are corrugated metal shells with plastic erected on steel struts. These kinds of warehouses have a simple and modular design, which makes them easy to install and reduces costs.
The average cost for a prefab warehouse made from steel is between $7-$10 per square foot. These types of prefabricated warehouses are highly recommended if you need warehouse space on a tight budget.
More complicated warehouses involve enclosed walls, climate control structures, and other interior amenities. The costs for more complex buildings can range from $15-$70 per square foot. Generally speaking, the larger the unit you decide to build, the lower the cost per square foot is.
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Warehouse Foundation Costs
First things first, all warehouses require a concrete foundation before they can be erected. If you do not already have a lot, then you will need to pay to install a concrete foundation slab first before you can start building a warehouse.
A typical 4-inch thick concrete slab for a warehouse costs anywhere between $6-$8 per square foot. This estimation includes the costs of the concrete itself, pouring, forming, mixing, and finishing. If you need a thicker slab of concrete, then you will have to pay more. Make sure you check local building ordinances because they can tell you how thick the foundation for a warehouse has to be in your area.
How Much Does it Cost to Build a 5,000 Sq. Ft. Warehouse?
5,000 square feet is considered a small to the medium warehouse. The exact costs for a 5,000-square-foot warehouse depend on the kind of structure you want to build.
A simple prefab warehouse should cost anywhere between $35,000 to $50,000 for the basic structure itself. That is assuming an average cost of $7 to $10 per square foot.
If you go for a rigid frame building, then the cost would increase to anywhere between $12 to $16 per square foot, For a 5,000 square foot building, that would come out to anywhere between $60,000 to $80,000 for the basic structure itself. Add about $30,000 to $40,000 for laying a concrete foundation, and you are looking at about $90,000 to $120,000.
If you are looking for a more finished and enclosed building then you are going to pay around $20-$30 per square foot. That comes out to approximately $100,000 to $150,000 for the basic structure and exterior. Add in the concrete base and it comes out to around $130,000 to $190,000 for the foundation and the structure.
If you want a finished and climate-controlled warehouse, it can cost about $40 per square foot. A 5,000-square-foot finished warehouse would cost upwards of $200,000.
How Much Does it Cost to Build a 10,000 Square Foot Warehouse?
Generally speaking, costs for warehouses 10,000 and up tend to go up because the extra material and weight require more equipment for construction. As such, once you go above 10,000 square feet, you see labor and equipment costs jump a significant fraction.
For a 10,000 square foot prefab unit, you can expect to pay between $10-$13 per square foot. That comes out to around $100,000-$130,000 for a prefabricated unit structure. Add in the cost of the foundation and you can expect to pay around $130,000 to $170,000 for a 10,000-square-foot prefabricated structure.
If you want a rigid structure warehouse, you will be paying around $15-$17 per square foot. 10 square feet at $15-$17 per square foot comes out to around $150,000 to $170,000. Add in the concrete foundation and you will be paying $180,000-$220,000 for the basic rigid structure
If you want a more finished unit you can expect costs to jump due to the increased insulation and electrical costs. A finished warehouse with minimal HVAC will cost about $24-$29 per square foot. A 10,000-square-foot warehouse at that price point would cost you $240,000 to $290,000 for the building structure.
Lastly, if you want a highly furnished and climate-controlled warehouse, then you will be paying above $45 per square foot. So for a 10,000-square-foot warehouse, your final bill for the structure will likely be over $500,000 or more when you factor in the concrete foundation slab.
How Much Does it Cost to Build a 20,000 Square Foot Warehouse?
Just like with a 10,000 square foot building, the cost for a 20,000 square foot building will be higher because larger equipment is needed to fasten the pieces and move larger construction loads.
A prefabricated 20,000 square foot structure should cost anywhere between $150,000 to $200,000 for the metal and plastic structure. You might also have to pay more because, at 20,000 square feet, you might need a thicker concrete slab.
A 20,000 rigid structure square-foot structure will similarly be more expensive due to labor and equipment costs. A 20,000 square foot structure should cost about $320,000 to $400,000. Again, expect to pay more for foundation costs as rigid structures are heavier and might require special installation procedures.
A 20,000-square-foot finished building will cost more due to increased insulation, electrical equipment, and a larger HVAC system. A 20,000 square-foot finished warehouse will usually cost between $30 to $40 per square foot. That comes out to about $600,000 to $800,000. For the basic structure.
Lastly, a highly furnished 20,000-square-foot warehouse will cost a lot. You can expect to pay over $55 per square foot. Overall, a fully finished and climate-controlled warehouse will cost over $1.5 million, potentially more depending on what special storage considerations you have.
How Much Does it Cost to Build a 50,000 Square Foot Warehouse?
Warehouses over 50,000 square feet are extremely large and are used to store large, industrial-sized machinery and products. A 50,000 square foot will cost much more due to the increased equipment costs for such a large building. You may also have to pay more to secure a plot of land that is large enough to fit a 50,000-square-foot structure.
The cost for a 50,000-square-foot structure will vary widely due to material requirements and labor costs. At the very least, you can expect to pay at least over $500,000 just for a prefabricated unit. A finished structure will easily cost over $1 million and higher-end units with fully furnished interiors and climate-control features will cost $2-4 million.
How Large is the Average Warehouse?
The factor that is most directly related to warehouse cost is size. According to the Energy Information Administration, the average square footage for a warehouse in the US is about 16,400 square feet. That number is a bit ambiguous because it includes several freestanding structures that might not traditionally be considered warehouses.
A more realistic estimate for the average size of commercial warehouses is around 30,000 to 40,000. Some warehouses are truly monstrous. For example, amazon’s gigantic fulfillment center warehouses can measure between 600,000 to over 1 million square feet per location.
Other Warehouse Costs
Maintenance
The most obvious recurring cost you will have to deal with is maintenance. Maintenance costs for freestanding structures are relatively low because steel and corrugated plastic do not have very many maintenance requirements.
You can expect to pay around $1,60 per square foot in yearly maintenance for a warehouse. So for a 10,000-foot warehouse, you can expect to pay about $16,000 to $18,000 in yearly maintenance costs. The more complex your warehouse, the more you will have to pay.
Insurance
Most jurisdictions will require you to have building insurance as well. Building insurance protects your structure and can also include any liability protection for workers. Commercial property insurance costs can vary greatly depending on the kind of property, but most businesses pay around $1,000 to $3,000 for every million in both materials and liability coverage.
Again, these costs can vary heavily depending on the nature of the warehouse. For example, a largely automated warehouse would most likely have lower liability insurance costs.
Staffing
Unless your warehouse is going to be fully automated, then you need to also factor in the cost of staffing your locations. Unless you plan to have substantial customer traffic, you do not need to have a large team on staff at your location.
The average cost for staffing a warehouse as of 2017 was $7.79 per square foot of space. That includes hourly and salary staff. As of 201, the average warehouse worker has an hourly wage of $13.32 while the average warehouse manager has an annual salary of $50,524.
How to Finance a Warehouse
Warehouses are a significant infrastructure investment so they require a large sum upfront. Unless you have a lot of money lying around you will probably have to get a commercial property loan to finance the cost of building and materials.
The most straightforward way to finance a warehouse is through a traditional property loan from a bank or other lending institution. Most banks can give you a warehouse mortgage with as little as a 10% down payment. The typical warehouse loan has an LTV of about 55% to 65%, which is fairly high as far as property loans go. Warehouses have relatively little risk so you can often get decent loan terms.
If you decide to get a property loan, you will have to submit full property documentation and show the lenders a drawn-up business plan. We recommend finding a property lawyer to help you explore options for a commercial property loan.
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The Bottom Line
Warehouses are a useful infrastructure project for several businesses. If you need a place to store physical products, then you might want to consider building a warehouse. To summarize, the average cost of building a warehouse in the US is around $25 per square foot. This cost can vary depending on the quality of the building materials and the complexity of the structure.
Building a warehouse is not a small project. It requires time, planning, and a lot of paperwork. So if you are going to build a warehouse, make sure you fully understand commercial property and construction requirements in your location. Also, make sure that you have a full understanding of the associated one-time and long-term costs. You may be interested in generator rental costs.