Do you want to start a distribution center and you want to know the cost breakdown? If YES, here are 6 factors that affect the cost of building a distribution center. In the United States, distribution is a design driver because of the increasingly wide range of products offered by supermarkets and due to the change in the efficiency of retail logistics.
More efficient distribution, augmented by automated technologies including mechanical handling and computerized inventory control, is allowing the overall proportion of space devoted to in-store storage to be reduced. Distribution centres mainly serve major retail chains and major supermarkets and are more or less large single or two – storey buildings that are located near to the motorway network.
Many of these buildings are deigned to achieve BREEAM ‘Very Good’ or ‘Excellent’ and may incorporate some form of renewable energy provision, such as photovoltaic panels on their extensive roofs. Distribution centres are similar in form to superstores but often contain high bay racking systems and can have overhead carnage. For that reason, they are often quite tall and have longitudinal crane rails at high level.
How Distribution Centers are Constructed
Note that the construction system that is often used is that of multi – bay ‘hit’ and ‘miss’ portal frames in which alternate internal columns are removed and the missing columns are replaced by spine beams. This means that the use of the internal space is maximized.
Columns are often on a 25 to 35m span and at 7.5 to 10m spacing along the building so that the internal columns on the ‘hit’ and ‘miss’ portal frames are at 15 to 20m spacing.
There are many factors affecting the cost of a distribution centre project. It’s very important to keep in mind many factors beyond location and price index when creating a comprehensive and nuanced cost estimate.
However, the value of human estimators is in the experience they bring to the table. An estimator provides best – value solutions that minimize cost while maximizing value. For example, the fluctuating prices of raw materials like steel, oil, cement and wood directly influence the cost to build.
2 Types of Cost That Impact the Construction of a Distribution Center
Additionally, indirect impacts such as permit costs and construction financing plans also factor in. You need an actual estimator to derive an accurate total cost. With all the variables that go into the process, online estimators are not suited for the task.
There are several types of costs to consider when developing a cost estimate. Hard costs, for instance, include easily foreseeable costs, such as labour and material. While these may seem easy to plan around, the price of materials can fluctuate widely depending on environmental and market conditions.
Soft costs can be quite hard to estimate. These include permitting, architectural design, insurance, engineering, taxes and more. Soft costs, and land costs especially, can easily put your project over the edge if not accurately planned for. These costs, unique to every project, are part of the reason it is difficult to estimate the exact cost of your specific project with a cookie – cutter online estimation tool.
Also note that energy and operation costs can end up exceeding construction costs over the lifetime of the facility. That’s why it’s necessary to have your project team 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.
6 Factors That Determine How Much It Cost to Build a Distribution Center
Depending whether you’re building a simple storage distribution centre or refrigerated distribution centre, for example, both construction costs and time will vary. Some factors that affect costs and time include:
1. Type of Center
Are you building a traditional bulk storage centre with forklifts? 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 grow your initial costs you should know that billions of dollars are lost every year in distribution centres – some of the losses occur because of misplacement or theft, and the rest results from stock damage.
2. Land
Note that 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. Additionally, a land with no prior infrastructure and paperwork in place can put your project over the edge if not accurately planned for.
3. Materials Used
Indeed most distribution centres are either built using concrete tilt – up or pre – engineered metal construction. For smaller distribution centres consider pre – engineered metal structures which tend to be cheaper and faster to construct. For large distribution centre and distribution centres concrete tilt – up method is more cost – effective as total area increases.
4. Energy Associated Costs
Although 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. Also consider reducing water consumption in little ways such as automatic flush low flow toilets and hands – free faucets.
5. Legal Requirements
Note that this includes time and resources for permitting, architectural design, insurance, engineering, taxes and more.
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Analysis & Planning
Professional distribution centre planning may seem like a waste of time for a smaller “out of the box” distribution centre setup. However, with environmental requirements getting stricter and energy prices growing it’s now pertinent 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. The average cost to build a distribution centre in the United States varies significantly by state.
In New York, the costs were on average 117 U.S. dollars per square foot. However, the costs in Texas were significantly lower at 89 U.S. dollars per square foot. The costs to build a distribution centre in the United States will largely depend on several factors, mentioned above.
Conclusion
Even with the various considerations for distribution centre construction, the demand for these centres is apparent. Since 2016, the percentage of U.S. warehouse space that is available has generally been on the decline.
To meet the decline in available space, there has been a push to build more centres, especially in the U.S. Between 2007 and 2018; the U.S. saw a rise in distribution centre construction that resulted in over 3,500 additional centres and warehouses being built to meet the demand.