Short answer
A warehouse lease affects value through its rent, remaining term and obligations. The business is valued on earnings after a market rent; buyers then test whether the lease outlasts client contracts, whether options and landlord consent allow a sale, and what make good will cost. A short lease on a site that is hard to replace lowers value.
How is rent treated in the valuation?
As a cost of earning the profit. A logistics business is valued on what it earns after paying for the sites it operates from, at a market rate. If the warehouse belongs to the owner's family trust and the rent is above or below market, the earnings are adjusted so the business value is not distorted, and the property is dealt with as a separate asset.
Accounting can hide the rent. Under AASB 16, a business that applies the standard puts leases of more than twelve months on its balance sheet as a right-of-use asset with a matching lease liability, and the lease cost reappears as depreciation and interest, both below EBITDA. Reported EBITDA goes up; the cash does not. Many private businesses do not apply the standard, so we restate every business to earnings after rent before comparing them, and treat lease liabilities consistently when moving from enterprise value to the value of the shares.
Which lease terms does a buyer read first?
| Term | Why it matters |
|---|---|
| Term remaining and options | A good site with little term and no option leaves the buyer exposed to relocation or a rent reset. |
| Rent review mechanism | Fixed increases, CPI or market reviews, and how current rent compares with market. |
| Assignment and change of control | Landlord consent may be needed for an asset sale and sometimes for a share sale; some landlords use it to renegotiate. |
| Make good | Removing racking, repairing slabs and restoring the building can be a large cost at the end of the lease. |
| Security | A bank guarantee or cash bond that a buyer will usually need to replace at completion. |
| Permitted use and access | Hours of operation, truck access and hardstand that suit a 24-hour freight operation. |
What happens when the lease and client contracts do not line up?
There are two mismatches, and each carries a different risk.
- Clients shorter than the lease. The usual 3PL position. If a large client leaves, its revenue goes and its share of the rent stays. The value then depends on tenure history and how quickly space has been refilled in the past.
- Lease shorter than the business. A carrier or distributor with clients on long contracts and eighteen months left on its only suitable depot faces a move: new racking, downtime, service risk and possibly higher rent. Buyers price that as site risk.
Location matters to both. Sites near a port, an intermodal terminal or a major freight corridor, zoned for round-the-clock operation, are hard to replace. That makes them valuable to the business and makes the lease over them worth protecting.
What should I sort out before a valuation or sale?
Prepare a one-page summary of every lease: term, options and their exercise dates, rent and reviews, make good, assignment and security. Consider exercising or extending an option before going to market, and get an early estimate of make good. Then see our pages on 3PL business valuation, warehouse and storage valuation and transport and logistics valuation, or request a quote. We confirm the fee in writing before we start. No hourly billing.
Read the full guide
- 3PL and contract logistics business valuationIndependent valuations for third-party logistics providers: contract warehousing, dedicated and shared-user sites, ecommerce fulfilment, cold chain...
- Warehouse and storage business valuationIndependent valuations for third-party logistics providers, contract warehousing, cold and ambient storage, ecommerce fulfilment, container depots...
- Transport and logistics business valuationIndependent valuations for road freight carriers, linehaul and intrastate operators, distribution and last-mile fleets, tippers and bulk haulage...
- Wholesale and distribution business valuationIndependent valuations for importers, wholesalers and distributors of industrial products: fasteners and fittings, bearings and power transmission...
- How we value industrial businessesThe methods we use, what we analyse and what the report contains.
- Fixed fees, confirmed before we startFees are priced on annual turnover. No hourly billing.
Related questions
We own the warehouse through a family trust. Is the building included in the business value?
No. We value the operating business as if it paid a market rent, and the property is valued separately by a property valuer. That keeps the two values clean if the property is kept, sold with the business or leased to the buyer.
More short answers
- How much is a 3PL business worth?There is no standard price or multiple for a 3PL. It is worth its maintainable earnings after rent and wages, capitalised at a rate set by how secure...
- Do short-term or month-to-month 3PL contracts reduce business value?Often, but not automatically. A client on a rolling agreement can leave at short notice while the lease, racking finance and permanent staff stay, so...
- How is a trucking or transport company valued?A trucking company is valued on the earnings left after properly funding its fleet, not on EBITDA or the resale value of its trucks. The biggest...
- Does machinery add to the value of my business?No, not on top of the earnings it helps produce. Machinery the business needs is already inside an earnings-based value, so owning plant worth $3...
Last updated . General information only, not advice about your circumstances. A valuation depends on the facts of the business and the purpose it is for.