How to choose between buying and renting a modular building?

There are three construction alternatives if you decide to expand your production facilities or storage area:

• "Traditional" construction
• Recourse to a logistics platform
• Rental or purchase of a modular building

The advantage of a modular construction is that you can respond quickly to your surface extension needs, and can react better to changes in your business.

But is it more advantageous to buy or rent modular structures? This article will guide you in choosing the most suitable formula for your particular situation:

1. Learn how to define your extension requirements
2. Identify the advantages and disadvantages of renting
3. Identify the advantages and disadvantages of purchasing
   
   

1 - How to define your surface area requirements?

Many industrial companies are opting for a temporary building as they want a quick and cost-effective solution for their building construction. However when one searches on internet, one quickly realises that there is a multitude of offers, and it is difficult to understand what each one corresponds to.

Whether you want to rent or buy your modular warehouse, you need to define your project according to two factors:

1. The objective of your surface area extension project
2. How long you need it for

• Build a temporary or permanent workshop
• Expand your storage area temporarily or permanently

How long do you need this new surface area for? :

1. Do you just need this space for a few months?
2. Is your need recurrent?
3. Is your number of orders growing in a sustainable way?
4. Do you need to rearrange storage areas at times of peak activity?
5. Does the implantation area belong to your company?
6. Do you need to replace an existing building that is damaged or unsuitable for its operations?

In the short or long term, the choice of materials that make up the framework, the envelope and the roofing may differ. The advantage of a modular solution is that you can have it built according to the level of robustness and isolation required by your activity.

2 –  Why rent a modular building?

It is more common to rent than to buy a modular structure. Rental is the best option if you do not know how long you will need a surface area expansion, or if your need is short-term:

• Response to a peak of seasonal activity (recurrent or not)
• Refurbishment work on your main buildings
• Displacement of production or storage after an incident
• Installation of a temporary sales area
• Provisional or projected production workshop

Renting also allows you to control fully your expenses and investments in line with changes to your production or storage:

• A modular building is recorded as an expense (USGAAP or IAS17 accounting standards), and does not need to be depreciated
• The TCO (Total Cost of Ownership) is low because the building is classified as a deconsolidated OPEX
• The contract can easily be suspended, or extended to new buildings in the event of increased activity

The building can quickly be made available to your company: in general 15 days[1] after contracting a storage marquee and 3 months[1] for a temporary storage building. Unlike traditional constructions, only a few preliminary works are needed before the structure can be erected. This makes it easy to add or remove modular buildings, and to index the rental period to changes in your activity.

3 - Why purchase a modular construction?

For a long-term project, a modular building can be an ideal solution for a long-term storage area or production workshop::

• New production or packaging lines
• Storage internalisation
• Storage in a controlled area
• Reorganisation of the flow chain for your industrial site
• Definitive production workshop
• Preparation or shipping area
• Company reception

In the long run, buying a modular structure can be more profitable than renting. Effectively, a new modular building makes it possible to add value to your equity and to depreciate your new building, whilst being less expensive than a traditional building. The investment is recorded in CAPEX.

Before investing, take into consideration that the installation is only part of the TCO of your project. Below are some additional costs to take into account:

• Energy expenditure (lighting, heating, air conditioning, machine power, etc.)
• Maintenance costs (which involve either using a service provider or appointing someone to carry out this function)
• Security (CCTV, alarms and also health certifications)
• Insurance and taxes

A removable industrial building can be at your disposal in less than 3 months[2], and can be relocated in the event of a downturn in your business.

For variable needs, a modular structure provides a flexible and cost-effective answer to your industrial challenges. Locabri provides fast, cost-effective and scalable modular solutions for industrial companies. Proludic SA used Locabri modular warehouses to solve its storage problems. Discover the real benefits of a 10-year partnership between the two companies in this case study: