WAREHOUSE LEASING PITFALLS

Once upon a time, a business owner in the manufacturing industry found himself facing a good problem to have: demand was growing faster than his capacity.

To keep up, he decided to lease a second warehouse and convert it into another manufacturing facility.

After weeks of searching, he struck gold.

The warehouse was almost perfect—flood-free, minimal repairs required, low rent, and immediately usable. Paperwork was signed, keys were turned over, and machines were lined up. Expansion was officially underway.

Then reality tapped him on the shoulder.

As operations were about to begin, he discovered that the property’s electrical connection was configured for residential use, not for heavy manufacturing. What he needed was three-phase power. There was no shortcut. He coordinated with Meralco, paid for a new post, and waited it out—time and money already bleeding.

Problem solved… or so he thought.

A few weeks into operations, a visitor from the munisipyo showed up with blunt news: the area was zoned residential, not industrial. His factory, though fully operational, technically had no right to exist there.

Once again, he reached for his wallet—this time to reclassify the zoning to industrial.

Then came the Fire Bureau inspection.

The warehouse failed to meet fire-safety standards for its intended use. Compliance required upgrades, additional equipment, and "BFP-branded" extinguishers—more unplanned expenses, more delays.

Three avoidable issues. Three expensive lessons. One expansion that cost far more than it should have.

Lesson:

Before renting a warehouse, always verify these three things before signing anything.

Warehouses aren’t my forte, so even if I had been the broker for this transaction, I likely would have missed these items as well.

That said—aside from power supply, zoning, and fire-safety standards—what other critical issues should we be watching out for when leasing warehouses?