Warehouse vs. Flex: Where Are Industrial Tenants Finding the Best Value?
By Chris Rohrer, Broker & Pete Kostroski, Broker | Rokos Advisors
The Twin Cities industrial market is still one of the tightest property sectors in the region, but not all industrial space performs the same way. For tenants, the decision often comes down to whether bulk warehouse or flex space delivers the greater long-term value. On the surface, it may feel like a straightforward cost comparison — but when you account for functionality, workforce needs, and long-term operating costs, the picture looks much more complex.
Warehouse: Scale and Efficiency
Traditional warehouse buildings dominate the Northwest and Southwest submarkets, where logistics and distribution hubs thrive along I-94, Hwy 610, and Hwy 169. Asking rents typically fall in the $7-8/SF NNN range, positioning warehouse as the most cost-efficient way to secure large footprints.
Tenants gain access to modern clear heights, wide column spacing, and ample truck courts — features critical for e-commerce fulfillment, regional distribution, or bulk storage. But the trade-off is clear: warehouses are designed for efficiency, not image. Most buildings include little to no office build-out, meaning companies with client-facing needs may have to invest heavily in improvements or lease a separate office location — costs that can quickly erode the headline rent advantage.
Flex Space: Versatility and Image
Flex properties, by contrast, are concentrated in the Northeast and South Metro, where smaller footprints and mixed-use layouts support tenants who need both production and professional space. Asking rents usually range from $10-13/SF NNN, reflecting the premium for hybrid usability.
For companies balancing light manufacturing, R&D, or tech operations with collaborative office needs, flex delivers real value. Employees benefit from better work environments, clients see a polished front-of-house, and leadership avoids the inefficiencies of splitting teams across multiple sites. While the rent premium can be significant, the gains in retention, culture, and productivity often offset the difference.
The Real Value Equation
The true cost of occupancy includes operating expenses, transportation and commuting costs, parking, and build-out dollars. A warehouse may come in cheaper on paper but require costly office retrofits or longer commutes that impact retention. A flex space may feel expensive up front, but if it consolidates operations and improves efficiency, it can deliver the stronger ROI.
Consider this scenario:
A warehouse lease at $8/SF may save $3/SF compared to flex. But if you add $250,000 in office build-out plus a satellite office lease, the savings disappear.
A flex lease at $12/SF may feel steep, but if it eliminates the need for a second site, improves retention, and streamlines operations, the total cost picture changes dramatically.
Warehouse space offers scale and efficiency, while flex space provides versatility and image. The “best value” isn’t about chasing the lowest rent — it’s about aligning the property type with your workforce, operations, and growth strategy.
Is your company weighing warehouse versus flex? Connect with Rokos Advisors to compare total occupancy costs and identify where your business will achieve the greatest return.
Rokos Advisors is an award-winning Minneapolis - St. Paul based commercial real estate/tenant representation firm specializing in helping businesses find the perfect office or industrial space for their company.