From A “Traditional” Office to An Industrial Warehouse? A Case Study

When it comes to determining the right size for your workspace, headcount may not be the only factor to consider. For industries that require extensive equipment or inventory for storage, your traditional Grade A office in the central business district (CBD) may not be the best fit.

In this case study, we cover the journey of The Glam Hub*, a fashion e-commerce business who recently moved into an industrial warehouse office in Singapore. The Glam Hub is a startup that caters to the modern-day fashionista, purchasing designer clothing from renowned brands and renting them out at a fraction of the cost. Previously, they had relied on third-party dry cleaning and delivery services to transport all their clothing and keep them fresh. With a fresh injection of funds from investors, The Glam Hub was now ready to ramp up its supply by multiplying its partnerships with designer brands across Asia.

While they had enjoyed their original 4,000-sqft office near Tanjong Pagar, they soon found that it could no longer accommodate their rapid growth. Costs for dry cleaning and transportation were beginning to take their toll. It also became increasingly difficult for The Glam Hub to retain its employees, and the lack of space for staff definitely didn’t help. It was time for The Glam Hub to find a new space.

The Glam Hub’s Workspace Concerns

A huge reason for The Glam Hub’s fundraising efforts was to increase their inventory tenfold in the next 4-6 months. In their 4,000-sqft space, about 2,000 sqft. could be used for storage while the remainder was used as workspace for a team of 20. Employees had to bunch around crowded tables for the entire team to fit. Elbows were knocking against elbows, and air wasn’t circulating nearly as well as it should.

Even so, The Glam Hub’s employees did appreciate their central location near Tanjong Pagar MRT. Nearby, they had easy access to a dry cleaning service as well as delivery pickups and drop-off sites.  A post office was within walking distance, making it easy to manage last-minute shipments and parcels. However, building regulations prevented them from having more than 60% of their space dedicated to storage. Additionally, their office was in a strata-titled building, which meant that The Glam Hub would potentially have to deal with multiple landlords in the same building if they wanted to expand. The company was eager to relocate to a new space where they could meet growing customer demand, increase their storage space, and improve staff retention.

Step 1: Search

The Glam Hub launched their personalised search on GorillaSpace. Their top priority was an office for at least 20 people that allowed for more than 60% storage space. They also wanted enough space for an in-house photography studio they would use to showcase all their outfits.  Above all, they wanted enough space to do their own dry cleaning so that they could greatly reduce their spend on a third-party dry-cleaning service. As their inventory increased, so would the cost of dry cleaning each article of clothing. Other requests included a loading bay to receive shipments from overseas and easily ship boxes of clothing to clients. Similar to their current location, The Glam Hub wanted to be in close proximity to a postal service, an MRT station and a diverse spread of F&B options.

From their GorillaMatch request, The Glam Hub received a personalised shortlist with direct offers from several long-term space landlords.  All the options spoke directly to their specific requests. The Glam Hub carefully previewed the spaces with 360 panos and HD photos. To keep their options open, they decided to visit the top  7 spaces in their personalized shortlist.

Step 2: Visit

After the first round of visits, The Glam Hub narrowed down their list to three spaces that perfectly met their storage space needs: two industrial warehouse spaces in Ang Mo Kio and one high-specs industrial space near Singapore Science Park to the west. All three top options were bare units, giving The Glam Hub free rein to design and fit-out their space as they saw fit. The Glam Hub also considered other features like location, size, and nearby amenities.

The Glam Hub was especially drawn to the industrial warehouse space at Ang Mo Kio. While not in the CBD, the Ang Mo Kio neighbourhood is only a short drive away from town and accessible via the Bishan and Ang Mo Kio MRT stations. The space is significantly larger than their original space, with a cargo bay and an additional 4,000-5,000 square feet available for storage. As an added bonus, the space comes with in-house amenities as well—a food court on the ground floor, a clinic, and a free shuttle service to the nearest MRT. In contrast, the other office locations in their shortlist were not as conveniently located and had fewer in-house amenities.

Step 3: Evaluate

While visiting these spaces helped The Glam Hub identify their favourite space, they still needed to weigh the pros and cons of leaving their current location for the new warehouse office at Ang Mo Kio. Moving to this new space would come with upfront costs for fit-outs and the necessary equipment for in-house dry-cleaning.

Workspace Costs
Stay in Current Office Move to Warehouse Space
Size (sq. ft.) 4,000 10,000
Rent per sq. ft. $8 $1.5
Monthly Rental $32,000 $15,000
Fit-Out $500,000
Reinstatement $40,000
Total for 1 year $384,000 $720,000
Total for 3 years $1,152,000 $1,080,000

 

At the new space, The Glam Hub would be paying only $1.50 per square foot per month, a much lower rate than the premium price of $8 for their current office in the CBD. Nonetheless, at 10,000 square feet, the warehouse space is also larger and required significant fit-out costs. To fit-out the space, The Glam Hub would need to spend around $50 per square foot, which is a relatively low rate since the space was already in good shape to begin with. In addition, the company would have to spend on reinstating their current space back to its original conditions. This process would cost only $40,000 ($10 per square foot), as The Glam Hub didn’t make too many modifications to the original space.

Due to these upfront costs, moving to a significantly larger space would cost them more—but only in the short-term. For their year, the total cost of moving to the new space would be $720,00047% pricier than staying at their current office. After three years, nonetheless, the overhead costs would be spread out over enough time. Moving out would actually save them more in the long term! While the cost difference seems small, The Glam Hub would effectively be spending less for a much larger space that fulfils their inventory requirements.

Dry Cleaning Costs
Stay in Current Office Move to Warehouse Space
Dry Cleaning Equipment 4,000 10,000
Operating Costs (Service + Transport) per article $8 $1.5
Total cost for 1 year $24,000 $30,054
Total cost for 3 years $72,000 $62,400

 

Apart from workspace costs, The Glam Hub also needed to account for the costs of doing their own dry-cleaning in-house versus relying on a third-party service. They were previously paying $10 per article of clothing for both cleaning and transportation. While purchasing their own dry-cleaning machines would cost around $30,000, they would no longer have to spend on transport, resulting in an average of only $4.50 per article. At the end of the day, doing their own dry cleaning would reduce their costs by almost two-thirds!

The Glam Hub now felt more confident in proceeding with their move. Not only would they gain more space for storage and dry-cleaning, they would also save on costs over the long run. At this stage of their business, their headcount was relatively stable and they foresaw sticking around for the next 5 years or more. Ultimately, moving out and taking their own space was the best decision for The Glam Hub’s business needs.

Step 4: Preparing the Space for Move-in

When it came to office design and layout, The Glam Hub wanted a  “less is more” look that would reflect not only their culture, but also let their beautiful designer clothes stand out. Minimalist white walls, long wooden tables, and a bright airy space were the primary design elements they had in mind. The Glam Hub decided to call upon the help of an interior designer—referred by GorillaSpace—to help out with sectioning the different “blocks” of their new space.

Firstly, they wanted to allocate at least 7,000 square feet of their space to clothing racks, dry cleaning stations, and a small photography studio. For the remaining 3,000 square feet, The Glam Hub was inspired by the collaborative layout of coworking spaces. Instead of private desks and cubicles, The Glam Hub preferred a mix of long and round tables to encourage movement and collaboration.

The entire fit-out process took about three weeks to complete—including the painting of walls, installation of Wifi and IT infrastructure, setting up dry cleaning equipment, and bringing in the right furniture. The process was relatively quick since the space was already in good shape and the overall design was minimalist to begin with. As soon as The Glam Hub made their first visit to the space, they already had a clear vision of their future office and went into the process well-prepared.

Final Thoughts

The Glam Hub is not the only fashion e-commerce company to occupy an industrial warehouse space. Similarly, we’ve seen Rent the Runway—a subscription service that loans high-end women’s clothing at an affordable price—become one of the largest in-house dry-cleaning operations in the United States. It is not uncommon for e-commerce companies to keep their workspace and inventory management in one location. In fact, having employees work next to the products they sell can go a long way in building brand identity!

At GorillaSpace, you can find a wide variety of long-term workspace options, ranging from traditional offices in Grade A buildings downtown to hi-specs industrial spaces in business hubs. Check out 360º walkthroughs and HD photos of workspaces on our platform. If you have more specific requests, just let us know through GorillaMatch and our smart engine will curate the spaces that best match your needs.

We work closely with clients to help them find their right workspace. If, like The Glam Hub, you are considering having your very own long-term office, reach out to us at +65 3163 6839 for a personalised conversation or drop us an email at [email protected].

*To protect our client’s confidentiality, certain details including the company’s name have been modified for this case study.

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