Understanding the value of square meter warehouse space in Saudi Arabia | Agility (2023)

Saudi Arabia is one of the world’s leading emerging markets, according to Agility’sEmerging Markets Logistics Index 2021. Renting warehouse space in Saudi Arabia can enable your business to move into this growing economic region without the high up-front costs of building infrastructure.

The high value of square meter warehouse space in Saudi Arabia reflects the opportunities it presents for expansion, efficiency, and resilience. Learn more below about the benefits of renting warehouse space, how much it costs in Saudi Arabia, and how to find the best rates.

Benefits of renting warehouse space in Saudi Arabia by the square meter

The e-commerce market is rapidly expanding around the world. According to ane-commerce market analysisfrom eCommerceDB, the Saudi e-commerce market grew 28 percent year over year in 2020 to reach USD $6 billion in revenue. And analysts from Statista forecast that the market will continue to experience a compound annual growth rate of 7 percent moving forward through 2024.

As e-commerce continues to grow, warehouse space and other commercial real estate are becoming more important for businesses in this market around the world, particularly in Saudi Arabia. If your company ships products to Saudi Arabia and other countries in the Middle East, renting warehouse space in the kingdom could be a valuable investment. The following are some of the potential benefits of renting warehouse space for your company’s goods in Saudi Arabia.

Better focus on core competencies

One of the greatest benefits of renting warehouse space is being able to focus on your company’s products and its primary goals. By renting warehouse space, you don’t have to worry about managing the warehouse itself, including facility maintenance. Instead, you can focus on moving your goods to consumers.

Additionally, third-party warehouses like those in Agility Logistics Parks are fully secure, with guard staff, CCTV, and sprinkler systems for fire prevention. You don’t need to worry about the theft of your goods or their accidental destruction from fire or other other catastrophes.

Fully functional facility infrastructure

Many warehouses for rent have the functional infrastructure you need to support warehouse operations. They provide reliable power, water supply, and connectivity for information technology systems. And some include temperature-controlled structures for cold storage, which is critical for food and beverage, life sciences, and health-care companies operating in one of the world’s hottest regions.

Expanded reach

(Video) warehouse inventory excel

Another benefit of renting warehouse space in Saudi Arabia is that it can expand your business’s reach to other large markets. Saudi Arabia represents a major retail market, which could grow around 6 percent through 2024, according toResearch and Markets.

If your company does not yet have a presence in the Middle East, leasing or renting international warehouse space in Saudi Arabia makes this market more accessible.

Fast, cost-effective delivery

If you regularly ship goods and cargo to Saudi Arabia, you can improve the overall experience for your customers by placing inventory in a warehouse in the region closer to them.

Consumers expect fast delivery: inone surveyfrom Convey, 79 percent of respondents considered two-day shipping an important factor in their shopping decisions. Having warehouses in the regions that you operate in is a key part of delivering the fast shipping that consumers have come to expect.

To add, urban centers in Saudi Arabia and across the Middle East are spread widely, often across varied and rugged typography. Renting warehouse space in these regions can close the gaps between cities, shortening delivery times for customers. You may also enjoy cost savings from carriers by storing products nearer to consumer centers in the Middle East.

Enhanced scalability

By renting space in a warehouse, your organization doesn’t have to commit to the permanent purchase of a specific amount of space. In other words, you have more flexibility to scale up or down as your business grows or focuses its offerings. Enhanced scalability will be key as retail markets in the kingdom continue to expand.

Up-front savings

Compared to purchasing or building warehouse space and developing the warehouse infrastructure you need to support your logistics operations, renting comes with relatively manageable up-front expenses and frees up your working capital. Because of that, your business will have more funds available to innovate and deliver its best products.

(Video) How to calculate Electrical load . #Learn Practical .(MEP Tutorial Series Ep-2) .

Resilient supply chain

Supply chain resilience measures a company’s ability to anticipate and withstand disruptions. Anticipating disruptions means more than simply predicting them; it means you’re taking steps to plan for them and, especially, to avoid them.

One step you can take to avoid supply chain issues is to rent more warehouse space to increase your inventory capacity. Holding safety stock can give you a stronger stance in the face of a supply chain disaster or disruption. In addition, spreading out your inventory across multiple warehouses can help mitigate the effects of supply chain disruptions confined to one region.

Average cost of warehouse space in Saudi Arabia by the square meter

Rental rates vary from region to region in Saudi Arabia. According to , the average annual cost of renting dry-storage warehouse space in Riyadh, Saudi Arabia, in the first quarter of 2020 was SAR 120 (USD $32) per square meter. Annual lease rates were as low as SAR 50 (USD $13) per square meter and as high as SAR 250 (USD $67) per square meter.

In Jeddah, Saudi Arabia, the averageprice of warehouse spacewas SAR 131 (USD $35) per square meter in the first quarter of 2020, according to Colliers International.Contact Agility’s contract logistics teamto get a quote for warehousing space in Saudi Arabia.

Factors that affect the cost of warehouse rental rates in Saudi Arabia

In addition to location, accessibility, and facility condition, the value of square meter warehouse space in Saudi Arabia depends on several other factors. These include inventory volume, type of goods, storage specifications, and others. Warehouse rents typically increase the closer to urban centers you need to store your goods.

Some of the costs and fees you might have to pay while renting warehouse space include the following:

  • Utility costs.In addition to the monthly rent rate, you may have to pay ongoing storage costs—such as electricity—while you use the warehouse. Many warehouses calculate these storage fees per pallet.
  • Receiving costs.Some warehouses charge receiving fees per shipment, while others charge this fee per pallet. In some cases, the warehouse’s base rental rate might include the receiving charges.
  • Fulfillment charges.A warehouse might charge this fee for packing and shipping your products. Typically, warehouses calculate this fee on a per-item basis.
  • Kitting charges.If some of your items require assembly prior to shipping, a warehouse may charge kitting fees per item or per hour.

When comparing rates, it’s helpful to estimate as accurately as possible your business’s turnover rate and possible future expansions.

Considerations for finding the best price for warehouse space in Saudi Arabia

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The main factors that determine a warehouse’s rental rate are the facility’s floor area, the rental rate in dollars per square meter, and the estimated operating expenses.

The above costs may add onto the base monthly rent, so it’s important to look closely at the rental agreement and discuss it with the warehouse owner before signing. Make sure you understand exactly what you’ll owe, which costs the monthly rental rate includes, and which fees you might eventually face for different materials or inventory volumes.

Number of square meters you’ll need in a Saudi Arabian warehouse

Calculating the amount of warehouse space that your business needs involves estimating the amount of goods you plan to store and understanding your utilization rate.

Determining how many square meters of warehouse space you’ll need

The following are some factors to consider when estimating warehouse space requirements:

  • Number and size of pallets
  • Ability to stack pallets vertically
  • Number and variety of stock-keeping units (SKUs)
  • Predicted growth in volume or variety of SKUs
  • Expected inventory turnover
  • Utilization rate

Understanding your warehouse utilization rate

Your warehouse utilization rate describes how much of the total available space you’ll be able to use safely and efficiently. Lower utilization rates—20 to 50 percent utilization—require more total space because you’re using less than half of what’s available. Higher utilization rates—up to 80 percent—require less space but could make it more difficult to access the goods.

Calculating warehouse utilization

To calculate your warehouse utilization percentage, you’ll need to know the total available space and the dimensions of your pallets.

Here’s how to do the calculation:

(Video) Nasr Packaging & Printing Co. Jeddah Saudi Arabia

  1. First, find the total available storage space of the warehouse. Multiply the total available square footage by its clear height (the available space between the floor and overhead objects).
  2. Then, find the total volume of your inventory by multiplying the volume of each pallet rack by the number of pallets you’ll store.
  3. Finally, divide your inventory volume by the total available space to calculate your warehouse utilization percentage.

Saving costs using a warehouse management system

A warehouse management system can give your company better visibility into your warehouse operations to help you optimize cost efficiency. Detailed inventory data from this technology will notify you when you need to replenish inventory so that you’ll always have sufficient stock to meet the demands of your customers, minimizing costly downtime.

Additionally, this technology can streamline inventory receiving and help staff more efficiently and accurately pick, pack, and ship inventory per order specifications. It will help you identify and eliminate your operational bottlenecks, keeping operating expenses, such as labor and materials costs, under control.

When you rent space in a warehouse, consider investing in this technology. But first choose a warehouse, like one from Agility Logistics Parks, that provides the connectivity you need to support it. This access to data and insights is another key part of building a resilient supply chain that can withstand disruptions and deliver reliable service.

Best way to find warehouse space for rent by the square meter in Saudi Arabia

The best way to rent warehouse space in Saudi Arabia is to contact a second-party logistics (2PL) partner like Agility.

Agility Logistics Parks operates over 1 million square feet ofwarehousing and logistics infrastructurein the three major regions of Saudi Arabia: Riyadh, Jeddah, and Dammam. It’s the largest private owner of industrial real estate in the Middle East.

Using Agility for your warehousing needs in Saudi Arabia provides your business with first-rate, modernized, secure, and sustainable warehousing infrastructure. In addition, Agility Logistics Parks can provide temperature-controlled cold-chain storage to clients that need it.

Both multinational corporations and small- and medium-sized businesses can benefit from Agility’s scalable warehousing solutions. Working with a trusted 2PL provider can give your business significant advantages when renting warehouse space in Saudi Arabia.

Rented warehouse space in Saudi Arabia and its benefits

Now that you better understand the value of square meter warehouse space in Saudi Arabia, you can make more intelligent decisions about renting the space you need in the region. Explore more benefits of using Agility’s warehousing and logistics network inSaudi Arabiafor your company’s storage and distribution needs.

FAQs

How do you value warehouse space? ›

Multiply the local cost per square foot by the total square feet in the warehouse you are evaluating. This will give you a rough estimate of its value. Modify this cost upwards or downwards based on the condition or any special features of your warehouse.

What are warehouse costs? ›

Definition of 'warehousing costs'

This includes warehousing costs such as rent, utilities and salaries, financial costs such as opportunity cost, and inventory costs related to perishability, pilferage, shrinkage and insurance.

What is warehouse cost analysis? ›

It is a numerical approach to ascertain precise costs of critical components of Warehousing operations, including facility spread out, workforce, and equipment. This method facilitates in understanding where the cost exceeds and how it can be eliminated.

What are warehouse grades? ›

Grade A warehouses offer tangible benefits such as 50% additional floor-load capacity, 40% more operational efficiency, efficient material handling space, safety & security of employees and adherence to international standard compliance.

How many SQ is a warehouse? ›

How Big is the Average Warehouse? The truth is, this is an ever-changing number. In the past, most warehouses were smaller than 10,000 square feet. However, these days, the average American warehousing unit is larger than 25,000 square feet.

How much is a 20000 square foot warehouse? ›

A 20,000 ft2 steel warehouse costs between $240,000 to $380,000, depending on its location, design, steel prices, and inventory type.

How do I make a warehouse budget? ›

How to Determine Your Warehouse Budget Needs for Q4
  1. Take Inventory of Your Warehouse Equipment.
  2. Look at Historical Data.
  3. Consider Your Growth Goals for the Upcoming Months.
  4. Use Rental Warehouse Equipment.
  5. Leverage Used Forklift Batteries.
  6. Stay on Top of Preventive Maintenance.
11 Nov 2020

What should a warehouse cost include? ›

What Are Warehouse Costs? Warehouse costs vary based on the facility, amount of storage space and services you require. The most common costs are associated with handling (receipt and dispatch), storage space, operations administration and general administrative expenses.

How do you calculate square footage of a warehouse? ›

Calculating Warehouse Space Needed

Divide the number of pallets by how high you can stack. Multiply the length and width of your pallets to determine the square footage of each pallet. Multiply the numbers from 1 and 2 above together. Divide the number you get from step 3 by your utilization percentage.

How do you calculate cost per order in a warehouse? ›

Once you've calculated all the totals from the labor, facility, and supplies categories, you'll need to know the number of orders shipped for that time period. Your total costs divided by the number of orders shipped are the total cost per order.

How is warehouse profitability measured? ›

Calculating Warehouse Profitability
  1. Labor Rate and Hours Spent by Customer.
  2. Warehouse Space (cost per sq. foot) vs. Storage Space Used by Customer.
  3. Freight Cost and Markups.
  4. Material Costs and Markups.
  5. Additional Overhead by Customer (e.g., support hours, facilities overhead)
22 Sept 2021

What determines the size of a warehouse? ›

The size of your new facility will ultimately be determined by these large notions as well as specifics, such as pallet size, aisle width, load-bearing capacity, and more. An experienced systems integrator or warehouse design consultant can help you make sense of all of this data.

What are the value-added services of a warehouse? ›

A value-added service (VAS service) goes beyond “typical” warehousing. Value add includes kitting, bundling, re-branding, customization, re-packaging, and work order processing (where components are put together to create a new item).

Where can you bring value within the warehouse operations? ›

Here are 5 ways to add value back to your business' operations with warehousing:
  • Save Precious Real Estate. One of the more obvious benefits of warehousing is that you save real estate in your office supply closet. ...
  • Share in Responsibility. ...
  • Automate Your Stock Inventories. ...
  • Answer to Events and Shows. ...
  • Get Your Time Back.
16 Sept 2016

What are value-added activities in warehousing? ›

Value-Added Warehousing services are those which complement and enhance freight transportation, warehousing, and logistics-based industries by assembling and customizing products moving through a distribution facility.

How do you calculate square Metres? ›

square metres is calculated by length multiplied by width whereas metres squared has the same length and width. 1 metres squared is 1 metre by length and 1 metre by width, and hence is 1 square metre. 3 metres squared is 3 metre length multiplied by 3 metre width which is 9 square metres.

How do you calculate warehouse space and storage capacity? ›

The total (or “gross”) volume of a warehouse is calculated by multiplying the width of the structure by its length and height.

What is unit of measurement in warehouse? ›

In a distribution and warehousing operation, a Unit Of Measurement (UOM) or unit of measure is the method by which you measure an item. UOMs are used to quantify inventory items and allow them to be tracked trough the supply chain process. It can be weight, mainly for raw material, or quantities.

How do you calculate price per square foot for a commercial building? ›

It can be calculated by dividing the price of the building by the building's square feet. For example, if a 2500 square foot building is selling for $250,000, then the PPSF is $100. Price per square foot can vary depending on where you would like to purchase or lease commercial real estate.

How much does it cost to build a 50000 sf warehouse? ›

How much does a 50,000 sq ft warehouse cost? A 50,000 sq ft steel warehouse costs between $600,000 and $950,000, depending on its design, inventory type, location, and steel prices. However, to ensure future profits for the warehouse, you must also consider the warehouse's soft and long-term expenses.

How much does it cost to rent a space in a warehouse? ›

Some spaces charge $0.85 per square foot for monthly rent, while others cost $10 per square foot per year. The factors that influence these rates are discussed in more detail below.

Which are the three components of warehousing cost? ›

Types of Warehousing Costs

Fulfillment and warehousing costs vary from company to company, but common fees you'll encounter are storage costs, handling costs (including special projects like kitting, and any pick and pack or parcel requirements), and general administrative expenses.

What is the best layout for a warehouse? ›

Also known as a through-flow design, the I-shaped layout is great for high-volume warehouses. It's set up in an “I” shape, with the loading and unloading area on one end and the shipping area on the other, with storage in the middle. The products are arranged so that the higher-volume items are easily retrievable.

What is the profit margin of a warehousing business? ›

Warehouse investments profit margins can range anywhere between 5% all the way up 15%.

What is warehouse checklist? ›

Warehouse inspection checklists are an essential safety management tool. Because warehouse workers increasingly face problems like increased exposure to repetitive motions and high-stress environments, checklists are particularly useful in preventing bodily strain-related injuries.

What are different types of warehouse costs? ›

Types of Warehousing Costs
  • Direct Cost.
  • Indirect Costs.
  • Fixed Cost.
  • Variable Cost.
  • Average Cost.
  • Marginal Cost.
  • Opportunity cost.
  • Money Cost.

How do you calculate space? ›

Multiply the length by the width and you'll have the square feet. Here's a basic formula you can follow: Length (in feet) x width (in feet) = area in sq. ft.

How is warehouse space divided? ›

The most common and efficient way to share is by dividing a warehouse into several smaller areas. You can use demising walls, fences, or special curtains. It is cheaper per square foot to construct a large warehouse than a small one.

How do you calculate storage space? ›

Multiply the length, width, and height of your belongings. If your larger items make a pile that measures 5 x 5 x 5 feet, you'd need a storage unit with at least 75 cubic feet.

How do you calculate price per order? ›

To calculate cost per order, you first need to add up all of your order expenses — everything you spend to acquire, fulfill, package, and ship orders — for a set period of time. Then, you divide your order expenses by the total number of orders you received during the same timeframe.

What are the 4 basic functions in a warehouse? ›

Regardless of the product, every warehouse moves things, stores them, keeps track of them, and sends them out. Those four functions result in our four essential categories of equipment: storage, material handling, packing and shipping, and barcode equipment.

What are the principles of warehousing? ›

10 Proven Principles for Best Warehouse Design and Operation
  • 1) Minimal Touch of Goods. ...
  • 2) One-Way Flow. ...
  • 3) Triadic Warehousing. ...
  • 4) Inventory Control. ...
  • 5) Efficient Labour. ...
  • 6) Benchmarking. ...
  • 7) Selecting the Materials Handling System. ...
  • 8) Know Your Data.
2 Feb 2021

What are the two 2 basic warehouse operations? ›

Picking and packing are two core functions performed in a warehouse. A warehouse management system should generate pick lists for each picker to retrieve items in the most efficient way.

What is minimum area for warehouse? ›

The minimum area of the warehouse should be a minimum of 8,000 Sq. ft. The height of the roof should not be less than 28-30 ft. The floor of the warehouse should be well maintained.

How is warehouse space utilization measured? ›

Warehouse space utilization refers to how efficiently you're making use of your entire warehouse. Start off by calculating the total size of your warehouse and subtract any space you use for things like bathrooms, offices, meeting rooms, and the like.

What is a Level 5 warehouse? ›

Level 5 – this top level is for automated facilities. They will again be unlimited in size, but require integration with warehouse control systems (WCS) and other automated processes.

What is a Level 3 warehouse? ›

The Level 3 qualification in Warehousing Operations is designed for students with experience in a supply chain related field, who wish to progress their career in the warehousing sector and develop specific skills and knowledge to advance into to a management. role.

How do you value commercial space? ›

Cost Approach

This is the simplest and most intuitive approach in determining the value of a commercial property. It is simply the cost of the land plus the cost of the building's construction. This is basically the same as of determining the value of a residential property.

How do you determine commercial value? ›

The value is established here by estimating the property's income using the capitalization rate (commonly referred to as merely the cap rate). The cap rate is the net operating income of the property divided by its current market value (or sales price).

How do you calculate commercial value? ›

Net Operating Income / Cap Rate = Market Value

You've calculated a cap rate of 7% based on other similar recent sales. By dividing the net operating income of $45,000 by the cap rate of 7%, you're left with a property value of around $640,000.

How do you calculate the value of a building? ›

The valuation of building or property is found by multiplying the net income by year's purchase. The valuation, in this case, can be too high in comparison with the actual cost of construction.

What is commercial value example? ›

Answer: Commercial value means the fair market value that a good or service would have if it was offered for sale. For example, the commercial value of a travel via corporate aircraft is the fair market value that travel would have if purchased from a commercial airline.

How do you calculate if a commercial property is a good investment? ›

What is a good return on a commercial property?
  1. Yields must be higher than residential property investment.
  2. Returns must be greater than the cost to finance the property.
  3. The property provides an income to live off.
  4. The return outweighs the risk of investing.
18 Feb 2020

What are the five methods of valuation? ›

This module examines the traditional property valuation methods: comparative, investment, residual, profits and cost-based.

How many times profit is a business worth? ›

In most cases, people can determine their online business value by multiplying their average monthly net profit by 36x – 60x. For example, If a business generates a rolling twelve-month average net profit of $35,000, then this business would be valued at $1.26M on the low end and $2.27M on the high end.

How do you calculate price per square foot for a warehouse? ›

​Calculating carrying costs of inventory for each square foot of your warehouse is simple. All you do is take all your inventory costs and divide it by your square footage.

What does commercial value mean? ›

Commercial or retail value is the price an end buyer pays for a product. With B2C shipments, it'll also usually be the declared value. Wholesale value is the price paid for a single item when purchasing in bulk.

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