How much does it cost to run a warehouse? It’s a bit of a loaded question, as gas, electrical, water, and other utility costs tend to vary based on the type of warehouse, the size of the warehouse, and the cost of utilities in a certain area, among other factors.
Generally speaking, however, you can expect to pay at least $2 or so per square foot in utilities per year. For a facility that’s 150,000 square feet in size, that’s roughly $300,000 in annual overhead warehouse utility costs – and several hundred thousand dollars is no small drop in the proverbial bucket. You’re looking at upwards of $25,000 per month just in utilities.
In this post, we’ll break down the common utility costs that warehouses incur, how to budget for utilities, and what you can do to reduce what you pay for utilities. Here’s a closer look:
Utility Costs That Warehouses Incur
First, let’s take a look at some of the utility costs that warehouses incur.
Factors Contributing to the Rate Increase
Here’s a look at the reasons why your utility bills have likely gone up:
Gas
Gas is commonly used to power certain pieces of equipment and various appliances in the warehouse. Heating and water heating tend to be the biggest demands for natural gas in such environments.
Electricity
On average, warehouse electrical costs are likely to be the single most significant cost. In addition to power lights, HVAC equipment, and basic electronics, warehouses also have to power the machinery that helps them operate. In warehouses with significant pieces of machinery or appliances that draw a high amount of energy, the electrical costs can add up.
Water
Water is commonly used to help operate various appliances and equipment in the warehouse. Aside from this, running water is also necessary in bathrooms and kitchen areas.
Garbage and Sewage
When many people think of utilities, they don’t include things like garbage and sewage – but these costs are commonly rolled into overhead utility costs as well. Depending on the type of waste you’re generating, you may even have to pay more for disposal fees.
What is the Average Utility Cost Per Square Foot for a Warehouse?
As we said in the opening, warehouses should expect to pay at least $2 per square foot per year for utility costs. By calculating the square footage of your warehouse and multiplying that figure by two, you should have a pretty good idea of what you’ll likely be paying on an annual basis for utility costs.
Guide to Budgeting for Utilities
While about $2 per square foot is the national average for many warehouses and commercial facilities, keep in mind that the type of warehouse you run and the industry you’re operating in can also play a factor in what your utility costs will be.
So what’s the best way to budget for your utilities? Start by locating your gas, water, electrical, and other utility bills and add them up. To get the most accurate result, we suggest adding them up by month for a full calendar year. This way, you’ll be able to see if there’s a time of the year when you’re consuming more energy, water, gas, etc.
If you want to get an even more accurate picture of your utility costs, determine any expected increase in costs based on the state or municipality where you live. This can help you gauge expected utility costs in the future.
Ways to Reduce Utility Costs for Warehouses
Tired of paying out what you are for utilities? The good is that there are various things you can do to decrease your bills and conserve your overhead costs. Here’s a look at some strategies that may be worth implementing:
Do the Little Things
There are various small things you can do around the warehouse to conserve energy, which can add up in the long run. For instance, swap out any halogen or incandescent light bulbs with more efficient and long-lasting LED bulbs. Install motion sensors for lights and smart thermostats to conserve electricity and heating and cooling costs. Install Energy Star appliances and other products.
Hire an Energy Consultant
Energy consultants, such as Green Line Rates, work to conduct utility audits on businesses to determine irregularities in billing and see if any rate changes can be negotiated with vendors. Utility bill audits can save business as much as 20 percent in utilities. Energy consultants can also perform energy audits to help businesses assess inefficiencies and help put together a plan to address them and conserve even more energy both in the short and long term.
Consider Renewable Options
With the cost of energy increasing and only likely to increase moving forward, many businesses may be interested in integrating renewable solutions into their facilities. Installing solar panels, for instance, can help a business generate its own power naturally from the sun and rely less on the grid. What’s more is that, depending on the area your warehouse is located in, you may even be able to sell excess power that’s been generated back to the utility company.
Train Your Workers
Challenge your staff to get involved in any energy savings goals that you have as a firm. Educate them on how to break out of any wasteful habits and track energy usage as you get the workforce more invested in your energy savings goals. If you hit certain energy reduction goals per month, be sure to reward your staff for the work that they put in.
Contact Green Line Rates Today
For more information on utility costs for warehouses and help estimating your bills, contact us today. And if you want to take matters into your own hands and make an effort to reduce your utility bills and overhead expenses, contact Green Line Rates today. As trusted energy consultants, we specialize in saving our partners money.
Contact us today for more information and to get started.