So I just wanted to touch on an issue that I'm dealing with with a distribution client of mine in the Mississauga area. It relates to clear height, and specifically:
How Valuable is Clear Height to Your Business?
To examine this properly, we really need to ask another question first: Do you use racking to store pallets?
If the answer to that question is yes, then clear height makes a big difference for you. If the answer is no, then clear height probably doesn't really matter as much to you.
Most companies that need a industrial warehouse for storage/distribution purposes do utilize racking and palletization in their business, and therefore clear height can be a critical factor in their facility. The more clear height you have, the more pallets you can store, which then increases the effective square footage in your space. And since lease rates are calculated based on horizontal square footage, and not cubic footage, you can actually maximize your effective square footage or cubic footage and achieve great cost efficiency on your lease rate by having a higher clear height in your facility.
Let's do some simple math:
With 40 ft clear height, you can rack 7 pallets high
With 22-24 ft clear height, you can rack 4 pallets high
With 18-20 ft clear height, you can rack 3 pallets high
*This is based on an assumption that each pallet height is 56 inches and the total space needed for each pallet is 66 inches high (space for pallet itself plus separation between them).
The image below provides a good visual for this:
This means that 40 ft clear height offers 75% more storage than 22-24 ft clear height and 133% more storage than 18-20 ft clear height.
When we reverse engineer this in terms of building square footage, this means that, in terms of pallet storage:
40,000 sq ft at 40 ft clear height is equivalent to roughly 70,000 sq ft at 22-24 ft clear height
40,000 sq ft at 40 ft clear height is equivalent to roughly 93,200 sq ft at 18-20 ft clear height
This puts things in perspective a little bit, and though lease rates are certainly higher for newer developments that have higher clear heights, it makes you wonder why the difference in lease rates between a 40 ft clear height space and an 18 ft clear height space is not even more drastic.
Part of the reason is that not every tenant can benefit from the higher clear height (for example, most manufacturing operations don't need anything more than 18-24 ft) and so it's only a portion of the pool of tenants that would place any premium on this feature.
But for a distribution company that utilizes racking and pallets extensively, the extra height has major value to them, and it's an underestimated and sometimes overlooked item in my experience.
Yes I know, it's very difficult to find a 40 ft clear height space in the GTA, especially for less than 100,000 sq ft, but even 28 ft makes a big difference over 18 ft. The bottom line is that you should absolutely quantify the clear height and factor that into your decision-making process on properties and lease rates.