Recently,
we explored ways to find additional office space within your building. If you missed
the column - you can quickly catch up by clicking the link below.
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the link below to view the article.
We’re
lacking space, so now what?
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In
today’s super competitive, hyper tight industrial market - moving an operation
is problematic as a relocation target may not be available. Not to mention -
moving is expensive, inefficient, and the pay back to your company may be many
years. Alternatively, many groups simply cannot move. Reasons given? Owned are
the premises, special permitting may be in place, proximity to employees, a
lease which doesn’t expire for several years and so on.
But
if your operation needs more room the regardless of the reasons above, space
must be found. Today I’ll share a few ideas as to how.
In
our experience, many operations believe they’re out of space when in reality a
bit more can be found in an existing location.
Add a production mezzanine: A production
mezz can be a great way to increase production square footage without consuming
floor space. If you own your location, add machinery or processes, look into
this solution.
Store some finished product or raw materials outside: Subject to
city ordinances (if outside storage is allowed), a yard or a secured area
outside multiplies your usable square footage.
Lease additional space close by: Whether you
own or lease your location, a temporary fix to your space needs may be
accomplished by leasing space down the street. But be forewarned - you may
create inefficiency. Certainly the upside to this strategy is that the excess
space (if the lease is flexible) can be discarded at the lease expiration (if
the space is no longer needed) or renewed until a more permanent solution
can be achieved.
Outsource a function to another producer: This solution
is potentially costly and should be compared to moving and keeping the function
in house. Some economies can be achieved however if the function is new (and
the upside unknown) or the barriers to entry are formidable.
Separate a portion of the operation and relocate that
portion: Once again with full acknowledgement that the main reason I
see for companies "relocating" is the inefficiency created by
operating from multiple locations - in some cases it works and can solve a
space issue. The best example that comes to mind is a client of ours. Needed
was an upscale office image combined with a plain vanilla warehousing function.
The two were diametrically opposed and unattainable in one building. We
discovered a solution! Relocate the office into an owned location and leave the
warehouse at the existing location - space issue solved.
Use a third party logistics company: Also known as
a 3PL, these independent warehousing providers serve as an outsource for all of
your warehousing needs. A third party logistics company provides a "soup
to nuts" solution for additional warehousing. Included in the per pallet
charge is warehousing, access, shipping and receiving, insurance, etc.
Add building square footage to your location: This solution
would only apply if all of the following criteria exist - you own your
location, the site is large enough to accommodate additional square footage,
and the city will allow additional square footage to be constructed. If all of
these apply, congratulations! You managed to foresee your growth and planned
accordingly.
Utilize cube by reworking your racking plan and purchasing a
swing reach forklift: Every time you modify your aisles in to a narrower
configuration, you gain approximately 33% increase in pallet storage density.
Therefore moving your wide aisles to narrow aisles, increases storage density
by 33% and moving from narrow aisles to very narrow aisles, you save another
33%. Of course this increased storage capacity comes at the price of increased
capital investment in lift trucks and pallet rack. A quick and easy tip to help evaluate
if you can increase your storage space in your current building is to stand at
one corner of the warehouse and look out at the opposite corner. If you can see
the opposite corner without obstructions, you likely have an opportunity to increase
storage cube using increased investment in materials handling products.
Commodity class, stacking height and sprinkler calculation must be considered
before you go vertical.
Add another shift or two: We have clients who have
prolonged moving for several years by adding a second and then a third shift.
Generally, the advantage of the second shift is that most overhead (rent, exec
salaries, benefits, etc.) are covered in the business generated by the
first shift. The second and third shift become very profitable as a result.
So,
there you go. More space than you knew existed.
Allen C. Buchanan, SIOR, is a principal with Lee &
Associates Commercial Real Estate Services in Orange. He can be reached
at abuchanan@lee-associates.com or 714.564.7104. His
website is allencbuchanan.blogspot.com.
