Favorte: these 5 factors affect warehouse utility costs more than expected

When choosing new warehouse space, managers typically focus on location and price per square meter. However, equal attention should be paid to utility costs, which can add up to thousands of euros in either extra expenses or savings annually.

Liina Tettermann, Sales Manager at Favorte Stock, highlights five factors that significantly impact utility expenses and explains why it’s crucial to analyze these numbers thoroughly before signing a lease agreement.

New warehouses are more energy-efficient due to better technical systems that significantly improve a commercial building’s insulation.

“Our in-house property management team has seen that getting the systems fully up and running after construction is just as important as their technical capabilities. Skipping calibration results in higher utility costs,” said Tettermann.

When searching for new warehouse space, Tettermann recommends checking whether tenants can consume on-site green energy in the future. For instance, the rooftops of buildings in Tähetorni Tehnopark are equipped with a 600 kW solar park, covering about half of tenants' annual electricity needs.

“Our clients can use the solar power without grid fees, which otherwise account for an average of 40% of the electricity bill. That’s a real cost-saving benefit in solar-powered developments,” she added.

Utility expenses are directly related to a tenant’s energy consumption. Large manufacturing companies use significant amounts of energy to run equipment and maintain a healthy work environment.

“On the other hand, e-commerce companies focused mainly on storage and logistics have significantly lower electricity usage,” Tettermann explained.

According to the Majandus- ja kommunikatsiooniministreerium (Ministry of Economic Affairs and Communications), lowering the temperature by just one degree can save at least 5% on heating costs. In well-insulated buildings, the savings can reach up to 10%.

“Some technical systems allow scheduling. When the whole team is working from home, on collective vacation, or it's the weekend, you can optimize the temperature and ventilation intensity of the premises,” said Tettermann.

In larger buildings, maintenance and utility costs (cleaning services, snow removal, landscaping, etc.) are spread across more tenants and volume, making savings possible.

However, Tettermann points out that larger buildings are also more likely to include common areas and corridors, the maintenance and utilities for which are also covered by tenants. “A shared waiting or break area can benefit your business in the long run. But if you want to avoid those completely, pay attention to whether the lease unit has a separate entrance,” she said.

To avoid surprises, it’s best to ask for actual utility bills from both summer and winter periods. If the building is still in development, request bills from a similar development or average costs from the developer’s portfolio.

Thanks to a systematic approach and in-house management team, Favorte has seen its utility costs decrease year after year. “In older warehouses, utility expenses can rise to 4–6 euros per square meter per month. But in our portfolio, the 2024 average was just 1.6 EUR/m² per month,” said Tettermann.