[Ind RE] How does total square footage affect rent?
I’m an analyst in this space and wanted to understand the general relationship between rent and total Square footage for warehouses.

When I try to find a relationship between these, I can easily see a downward trend per square foot for larger warehouse spaces.  This seems to generally hold true. However in smaller spaces, 20k or less, there is a lot more variation.

My question is if other factors play a larger part over size once you get to a certain threshold and maybe how to think of that.
[{"id": "ha6vhpj", "text": "I would suggest that the relationship would be exponential. So, like you mentioned, smaller warehouses would vary more in rent and as they begin to get bigger the impact of any additional square foot will begin to taper off. \n\nI\u2019d also think that there are other factors that would be involved in the price per SF. Such as the # of docks, class of the space and length of the lease (I\u2019m sure someone could add on to this list).", "replies": [{"id": "ha6wo45", "text": "Yea, I experimented looking at the log of total square footage to get a better fit which does well.  I like your list of characteristics which is helpful for additional paths to explore", "replies": [], "depth": 2}], "depth": 1}, {"id": "ha6vthi", "text": "For industrial spaces, there are many more qualifiers than SF (% office, CCH, # of docks/DIDs/ amenities like cold storage, rail spurs, cranes/tax per SF/L:B ratio). At 20K or less which is already small, loading and ceilings are gonna be more impactful than size.", "replies": [{"id": "ha6x2t7", "text": "What is DID and CCH acronyms? For loading, do you mean grade level vs dock or just general rear load front load?", "replies": [{"id": "ha70i1j", "text": "Drive in door.  Basically a metal roll up door. \nCCH is clear ceiling height. How much you can stack vertically ona warehouse before you reach the truss.", "replies": [{"id": "ha721t2", "text": "Thanks for the clarification", "replies": [], "depth": 4}, {"id": "ha78dmw", "text": "This is great info, thank you.", "replies": [], "depth": 4}], "depth": 3}, {"id": "ha70kwo", "text": "And generally grade level socks are inferior to truck height docks and exterior docks are better than interior", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ha7115d", "text": "Anything below 10-30k square feet will be uNiQuE to be hard to put in a model. \n\n&amp;#x200B;\n\nLocation, docks, rail, parking, 'yard space', etc etc. all matter", "replies": [{"id": "ha72p51", "text": "Agreed, it\u2019s certainly not easy as there seems to be a lot of additional factors at play.  A lot of the value for us is being able to quantify some of the intuitive insights that a lot of veterans have built up.", "replies": [{"id": "ha7fff3", "text": "Distance to freeway onramp, port, or railroad if it's big.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ha72bl2", "text": "Min industrial condo with a truck rollup, warehouse, and a front office is most expensive.  Can be $400-500/sf NNN.    A company like Walmart often does not pay a lot of rent even in prime zip code. They sign 5-10 years and pay rent on time to get a good rent.\n\nLocation, access to freeways and how much the landlord wants to charge dictates the rent.", "replies": [{"id": "ha78zm7", "text": "Those sound like buying prices, I was looking at rent. Though your point still stands.\n\nI did want to tease out, when going through that decision tree of willingness to pay a premium, what that flow might look like.  Ex. It\u2019s a small space at 10k so I can get 1.10 a month, but it has a larger office build out than a comp, so that adds 10 cents more.  And then it\u2019s 2 min from highway which is better than most, so I\u2019d be willing to pay 5 cents more for that.\n\nThe end result isn\u2019t a hard definitive this is the price no matter what, but have some data driven points to aid the discussions.  Otherwise, we\u2019re working off comps which while valid, can be tricker to quantify", "replies": [{"id": "ha7awwf", "text": "Rent prices.  That was the major store 47,000sf and a sports 23000sf the difference is a lot.  For a 1200 sf industrial condo they want more than any of the above.", "replies": [{"id": "ha7c0p2", "text": "Is that monthly or yearly?", "replies": [{"id": "ha7cu3k", "text": "Sorry the 1st is sale price.  For lease 2-4 per mo for large stores.  Smaller place can be 3 to 7/sf nnn. This is near sfba South Bay.", "replies": [{"id": "ha8kphd", "text": "Is this retail??", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "ha84g0c", "text": "Retail tho", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ha8jyf0", "text": "Hey man, good luck trying to find a perfect formula or relationship to determine rents haha but as a former research analyst I applaud your effort. I work at an industrial REIT now and here are the major property characteristics we track that effect our budgeted rents, which are not the market rents we achieve at lease signing or what number we advertise (i.e. asking rents), it\u2019s the number we expect to actually achieve if an average tenant submitted an offer on a space in the current quarter. We determine this number by looking over all lease comps for similar or like spaces that were signed in previous quarters, then we compare those lease comps\u2019 characteristics with our vacant spaces\u2019 characteristics and make an estimate on what we can achieve. It\u2019s often called a \u201ccomps matrix\u201d and it\u2019s essentially the same idea as the sales comparison approach in an appraisal only with leases. It\u2019s honestly the most accurate and quickest way to determine a spaces market rent and thus $/Sq.Ft. amount. Best of luck to you though!\n\nProperty characteristics:\n* Construction type (concrete tilt vs metal)\n* Building Age\n* Parking (car spaces, handicap spaces, trailer spaces)\n* Excess yard (in acres)\n* Column spacing\n* Clear height\n* Rail served and if so how many rail doors\n* Dock high doors\n* Drive in/grade level doors\n* Loading type (front loading, cross dock, etc.)\n* Power capacity (amps @ voltage)\n* Office sq ft\n* Any certification? (LEED Gold, silver, etc)\n* Sprinklers? If so what capacity\n* Lighting type for warehouse and office?\n* HVAC in office or warehouse?\n* Any specialty space (2nd floor office, freezer/cooler, lab space, etc)?", "replies": [{"id": "ha8nbep", "text": "Yea this is a really great list!  We have pretty good data, so we get to test out relationships between characteristics for all of them.  Though as someone who is newer to the space, this helps really narrow down where I put my energy.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hacv9d6", "text": "Price PSF is a function of Rent PSF....the bigger the space I see the lesser the rent and vice versa. Obviously, unique attributes like docks, ceiling heights, etc. play a part too but that\u2019s my general rule of thumb", "replies": [], "depth": 1}, {"id": "hcej45i", "text": "It\u2019s above my BOMA standards and it\u2019s outside wall to outside wall", "replies": [], "depth": 1}]