For many businesses, commercial real estate decisions boil down to finding the right balance between cost, location, and facilities. Industrial space often checks all these boxes for businesses that don’t require high foot traffic or luxury furnishings. In particular, small bay industrial warehouses, ranging from 1,000 to 1,500 square feet, offer an appealing opportunity for startups and small businesses looking to lease their first commercial space.
The number one appeal of industrial space compared to other commercial real estate like retail or office is cost. With fewer amenities and utilitarian spaces focused on warehouse and production capacity, small bay industrial real estate can be leased at significantly lower per square foot rates than other commercial buildings. Rates will vary drastically depending on location, but small bay industrial space often goes from between $8-$12 per square foot in many markets. This compares favorably to upwards of $30 per square foot for classroom-style office space in the same regions.
In addition to lower leasing rates, small warehouse spaces also offer savings on property taxes and insurance. Since the spaces themselves are relatively simple, insulation, electricity and other construction costs landlords have to factor into leases are also less. For small businesses working with tight budgets, these cost savings from industrial real estate make fitting a lease into their finances much more feasible.
In addition to budgetary factors, many small industrial bays also provide fantastic location. Typically situated in light industrial zones on the outskirts of metro areas, small industrial warehouses grant quick access to highways, airports and shipping infrastructure. The exact proximity depends on the market, but even being within 15-30 minutes of major transportation and shipping thoroughfares lends itself perfectly to small manufacturing, distribution or ecommerce businesses.
These locations also tap into vital labor pools, with access to blue collar and manufacturing workers in industrial neighborhoods or suburbs. For any business relying on semi-skilled labor for production or shipping operations, having a location accessible to where this workforce lives pays dividends. Contrast this to offices in more white collar central business districts which require workers to commute against heavy traffic.
Lastly, the facilities built into small bay industrial spaces perfectly match the operations of target tenants. Warehouse spaces optimize ceilings for indoor racking and storage systems to maximize inventory capacity. They also support heavy equipment via reinforced floors and wide loading doors to accommodate freight trucks. While unfinished, these warehouses suit operational needs much better than attempting to retrofit excess space unused by office staff in a retail building.
Every business deserves workspace tailored to how they function, which small bay industrial real estate provides for product and inventory centric companies. The stripped down nature may not have luxury finishings, but these facilities allow small businesses to focus their capital on the equipment, technology and people powering operations versus expensive facilities they don’t fully utilize.
For startups and small businesses wanting to secure their first commercial lease, small bay industrial space checks a lot of boxes. The combination of lower costs, strategic locations and custom facilities supports scaling operations. While class A office space may impress investors and clients, small industrial space often empowers the business itself.
The key is finding the right market and property within your budget. Reputable real estate brokers familiar with local zoning policies can help identify ideal locations to suit geographic and labor needs. They also navigate negotiations to help achieve favorable leasing terms. For any small business needing warehouse capacity, check out available small bay industrial space in your metro area. The cost savings, location perks and custom spaces give startups and growing businesses infrastructure to reach the next level.
Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or investment advice. It is always recommended to consult with a qualified financial advisor or investment professional before making any investment decisions.
Scott Naasz
Founder and President Broker
North Star Commercial Real Estate Advisors Keller Williams Preferred Realty