How to Sell a Warehouse: Steps, Value, Paperwork

Selling a warehouse is not like selling a house. A buyer looks at how high the ceiling is, how trucks get in and out, what the leases say, and what the ground was used for before. This guide walks through how to sell a warehouse building in seven steps: choosing how to sell, what buyers measure, how the price is set, the paperwork, the problems to raise early, comparing offers, and closing. It is about selling the building and the land. Selling a warehousing or logistics company, with its contracts and staff, is a different kind of deal, covered near the end.

Thinking about selling your warehouse, IOS yard, or industrial building? Tell us about your property and we’ll get back to you.

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Step 1: Decide How You Will Sell the Warehouse

There are three ways to sell a warehouse, and each one trades time, cost and control differently.

List it with a commercial broker. The broker prices and markets the building, shows it, and brings offers. You sign a listing agreement that says how and when the broker is paid, so read that part before you sign.
Sell it yourself. You take on the pricing, the marketing, the tours and the screening of buyers. The guide to selling commercial property by owner covers that route step by step.
Sell it directly to a buyer. Selling directly to a buyer means no listing agreement. A direct sale also skips the time a listed building can spend waiting for the right buyer to show up.

If you run your own business in the building and want to stay, there is a fourth shape: sell the building and lease it back. Want to stay in the building after you sell? Ask us about a sale-leaseback. The sale-leaseback guide explains how that works.

Step 2: Know What Buyers Measure in a Warehouse

Buyers and their lenders judge a warehouse by a short list of physical facts. NAIOP, the commercial real estate development association, defines most of them in its terms guide for the industrial market.

Clear Height

Clear height is the distance from the floor to the lowest thing hanging from the ceiling across a large part of the work area: beams, joists or truss work. NAIOP calls it the most important measure of the inside height of an industrial building, because it sets the minimum height of usable space inside. Ceiling height is measured to the inside top surface of the room, so it is usually higher than clear height. In NAIOP’s table of typical features, a general-purpose warehouse has 16 feet or more of clear height.

Loading Doors

NAIOP describes a loading dock as a raised platform, usually at the same height as the floor of a truck or rail car, so goods can be loaded and unloaded. A dock-high door usually opens about four feet above the truck court, which NAIOP gives as the standard tractor-trailer height. A drive-in door is at ground level, so trucks, forklifts and other vehicles can enter without a change in height. Count both kinds, because buyers compare the number of doors to the size of the building. NAIOP’s table gives a general-purpose warehouse about one door for every 5,000 to 15,000 square feet.

Truck Court

The truck court is the paved area next to the loading docks where trucks turn, back in and park to load. NAIOP says its most important measure is the depth from the building to the far edge, because that depth affects how easily trucks can move.

Column Spacing

Column spacing is the distance between the posts that hold up the roof, written as width by depth. It sets the size of each bay, the open block of floor between four columns.

Office Share, Power and the Land

Buyers also look at how much of the building is office space, the electrical service, the sprinkler system, the roof, the parking and the size of the lot. In NAIOP’s table a general-purpose warehouse has less than 15% office space, while a flex building can be 30% to 100% office. Extra land for trailers or equipment can matter as much as the building; see what makes an IOS yard valuable.

Put these numbers on one page before you talk to anyone: total square feet, clear height, dock-high and drive-in doors, truck court depth, column spacing, office square feet, power, sprinklers, year built, lot size and zoning. A buyer who gets that sheet up front can give you a real answer sooner.

Step 3: Understand How a Warehouse Is Valued

The Douglas County, Colorado assessor’s valuation fact sheet describes three approaches it weighs when it values commercial and industrial property:

Sales comparison: sales of similar buildings between unrelated parties, adjusted for the differences.
Cost: what it would cost in labor and materials to replace the building, minus the depreciation it has built up.
Income: the net income the building can earn, turned into a value by capitalizing that income.

For a leased warehouse, the rent is a large part of what a buyer is paying for. For an empty or owner-occupied building, sales of similar buildings and the rent the space could earn carry more of the weight. For more on putting a number on it, read how much is my commercial property worth.

Step 4: Pull the Paperwork Together

Most of what a buyer asks for is already in your files. Expect to be asked for the deed, every lease with its rent roll, the last few tax bills, a survey, and any environmental reports you have. Send the leases and the rent roll early, because they are part of the value. Add permits, any certificate of occupancy, roof and equipment warranties, and service contracts you would hand over. The full checklist of documents needed to sell commercial property explains each one and when buyers ask for it.

Step 5: Raise the Hard Parts Early

Problems shared at the start can be priced in. Problems a buyer finds late tend to slow a deal down or end it.

Tenants

A buyer reads every lease, amendment and side letter, because one missing page can change what a lease says. We buy buildings that are leased to tenants, owner-occupied, or vacant.

Vacancy

An empty warehouse keeps costing taxes, insurance and upkeep while it waits for a buyer.

Environmental History

A buyer of an industrial property will often order a Phase I environmental site assessment. The EPA says the inquiry under its All Appropriate Inquiries rule must be done or updated within one year before the buyer takes ownership, and some parts, such as interviews with current and past owners and a search for environmental cleanup liens, within 180 days. So an old report helps, but the buyer’s consultant will update it or start a new one. Environmental history is part of how we price a property, not an automatic no. Ask an environmental attorney or consultant about your site.

Liens, Back Taxes and the Mortgage

Owing money on the building does not by itself block a sale: a mortgage, liens and back taxes are usually settled out of the seller’s proceeds when the sale closes. See selling commercial property with liens or unpaid taxes.

Step 6: Compare Offers on More Than the Price

Two offers with the same price can be very different deals. Before you pick one, compare:

Who is buying. The name on the contract, and whether that person or company has bought property like yours.
How they will pay. Cash on hand, a loan that still needs approval, or money that still needs to be raised.
The review period. How many days the buyer gets for inspections and paperwork, and what lets it walk away.
The deposit. How much earnest money goes into escrow, and when it stops being refundable.
The conditions. Any approval, rezoning or tenant step the deal waits on.

A lower offer with fewer conditions can be worth more than a higher one that falls apart. Have a real estate attorney read the purchase agreement before you sign.

Step 7: From Signed Agreement to Closing

After both sides sign, the buyer finishes its review, the title is checked, and the closing date is set in writing. A title company or closing attorney handles the title search and the closing paperwork. At closing, you sign the deed and get paid. The exact closing date depends on the property — the title work, any leases, and inspections — and it is written into the purchase agreement.

Who pays which closing costs? It depends on the property and the deal. The split is written into the purchase agreement, so you see it before you sign.

Selling the Warehouse Building vs. the Warehousing Business

Some owners own two things: the building and the company that runs in it. They can be sold together or apart. Selling the operating company means selling its customer contracts, equipment, staff and books, which is a business sale, usually handled with a business broker or an M&A adviser. Selling only the building is a real estate sale, and the company can stay as a tenant if it signs a lease with the new owner. Talk to your tax advisor before you choose.

Questions Owners Ask

How long does it take to sell a warehouse?

It depends mostly on how you sell. A listed warehouse goes through a marketing period before offers come in, and a direct sale skips that wait. Once an agreement is signed, the buyer’s review period, the title work and any tenant letters set the pace, and the closing date is written into the agreement.

Do I need a broker to sell a warehouse?

No. You can list it with a broker, sell it yourself, or sell it to a buyer directly. Selling directly to a buyer means no listing agreement. If you sell it yourself, plan for the pricing, marketing and buyer checks a broker would otherwise do.

What is clear height, and why does it matter when I sell?

Clear height is the distance from the floor to the lowest beam, joist or truss over a large part of the work area. NAIOP calls it the most important measure of a warehouse’s usable inside height, so buyers ask for it first.

What is a truck court?

It is the paved area beside the loading docks where trucks turn, back in and park to load and unload. NAIOP says the depth from the building to the end of the truck court is its most important measure, because it affects how easily trucks can move.

Do I have to fix up my warehouse before I sell it?

Not to sell it. Repairs can help a listed building draw more buyers, while an as-is buyer prices the condition into its offer instead. Fix what is unsafe, and get a quote for the big items such as the roof, so you know what a buyer will be weighing.

Can I sell a warehouse that has tenants?

Yes. Start early: a buyer will read each lease and often asks every tenant to confirm its lease terms in a signed letter, and those letters can take a while to collect.

Ready to Sell Your Warehouse?

We buy warehouses straight from owners in all states, with a cash offer and no commission to us. Asking for an offer is free, and you are not committed to anything unless you sign a purchase agreement. Tell us about your warehouse and get a cash offer.