Short answer – it depends. Globally speaking the time needed to build a warehouse has declined in the past 10 years. However, there are still big differences, even between countries in developed economies. For example, one of the best performing countries according to the World Bank in terms of time required are Singapore (41 days in 2018) and United Arab Emirates (50.5 days in 2018). At the same time in United Kingdom you can become a warehouse owner in 86 days. Compare that to 183 days in France or 126 days in Germany.
While building times are declining, the costs to build high tech modern warehouses have skyrocketed. This has been further fueled by raising property prices and the demand for last-mile distribution centers in metropolitan areas (we covered this topic in our report on Polish warehouse market outlook).
Factors affecting warehouse construction cost and time
Depending whether you’re building a simple storage warehouse or refrigerated warehouse, for example, both construction costs and time will vary. Some factors that affect costs and time include:
- TYPE OF WAREHOUSE. Are you building a traditional bulk storage warehouse with fork lifts ? Or are you implementing an automated workflow complete with robotic systems (such as KIVA) and AS/RS conveyor systems? While additional systems and procedures will increase your initial costs you should know that billions of dollars are lost every year in warehouses – some of the losses occur because of misplacement or theft, and the rest results from stock damage.
- LAND. Land cost is a big contributor to overall expenses. Smaller spaces are the most cost-effective and, by changing storage procedures, you can take advantage of storing more in less. Also, a land with no prior infrastructure and paperwork in place can put your project over the edge if not accurately planned for.
- MATERIALS USED. Most warehouses are either built using concrete tilt-up or pre-engineered metal construction. For smaller warehouses consider pre-engineered metal structures which tend to be cheaper and faster to construct. For large warehouses and distribution centres concrete tilt-up method is more cost-effective as total area increases.
- ENERGY ASSOCIATED COSTS. While better building insulation and automatic lighting systems increase your building cost, investing into this kind of solutions will make a huge difference to your bottom line and the cost of these improvements will pay for themselves with relative speed. Another pro tip – consider reducing water consumption in little ways such as automatic flush low flow toilets and hands-free faucets.
- LEGAL REQUIREMENTS. These include time and resources for permitting, architectural design, insurance, engineering, taxes and more.
- ANALYSIS & PLANNING. Professional warehouse planning (see our Complete Guide to Warehouse Planning) can seem like a waste of time for a smaller “out of the box” warehouse setup. However, with environmental requirements getting stricter and energy prices growing it’s critical to have professionals perform both an energy-efficiency analysis and a life cycle cost analysis (LCCA). These analyses serve as a process for formally calculating the ROI you can expect from building investments, allowing you to put numbers behind your design decisions.
Alternatives To Warehouse Construction
Supply chain managers in industries as diverse as retail, FMCG, automotive and industrial goods are continuously looking for ways to optimize costs and lower shipping times.
As an alternative to long term lease agreements increasingly we see forwading looking brands opting for flexible on-demand warehousing as an alternative. Visit Waredock networked distribution page to learn more how you can benefit from cross-border network of warehouses.