Is a 3PL cheaper than your own warehouse?
The 3PL vs own warehouse decision is fixed cost against variable cost. Leasing your own warehouse means rent on the whole building every month, full or half empty, for the length of the lease, plus the people, equipment and software to run it. A 3PL charges for the pallets stored and the orders shipped. If the space would sit full and busy all year with your own team, a lease can cost less per pallet. If inventory swings, volume is still growing, or you need space for months rather than years, a 3PL usually costs less.
How much does it cost to rent a warehouse in Los Angeles?
Kidder Mathews put the average direct asking rate for Los Angeles industrial space at $1.36 per square foot per month NNN in Q3 2026, and the San Fernando Valley average at $1.57, which Kidder reports as a separate market. The Los Angeles report also has Class A buildings leasing at $2.40 to $2.75 per square foot NNN, with many of those leases asking for a letter of credit equal to 9 to 12 months of gross rent.
Here is what base rent alone looks like at those averages:
| Space | At $1.36 (Los Angeles average) | At $1.57 (San Fernando Valley) |
|---|---|---|
| 5,000 sq ft | $6,800 a month | $7,850 a month |
| 10,000 sq ft | $13,600 a month | $15,700 a month |
| 20,000 sq ft | $27,200 a month | $31,400 a month |
NNN means triple net: on top of base rent, the tenant pays its share of the building’s property taxes, insurance and maintenance. Industrial leases also tend to run for several years, so a lease is a commitment to that monthly number long after this year’s volume is known.
What else does running your own warehouse cost?
Rent is the line everyone checks. These are the ones that decide the comparison.
| Cost | Your own leased warehouse | A 3PL (Alvy Logistics 2026 card) |
|---|---|---|
| Space | Rent on the whole footprint, full or empty | From $25 per pallet stored per month, or from $2.50 per sq ft for dedicated space |
| NNN charges | Taxes, building insurance and maintenance on top of rent | No NNN line on our card |
| Commitment | A multi-year lease, often with a deposit or letter of credit | Terms that are not annual-only |
| Racking and equipment | Buy racking, forklifts, pallet jacks and dock equipment | Nothing to buy |
| People | Hire, train and manage staff, and cover peaks and absences | From $12 per pallet in or out, from $5 per order plus pick and pack labor quoted per job, from $38 an hour for projects |
| Software | A warehouse management system and its integrations | Inventory and orders in the Logiwa client portal, which also connects your online stores (for example Shopify) |
| Containers | Your crew unloads them | Container unloading quoted per container |
| Insurance | Policies for the building operation and your inventory | Ask any 3PL, us included, what its contract covers and what you should insure yourself |
How do you compare a lease with a 3PL per pallet?
The fair comparison is cost per pallet actually stored. For a leased building:
(Rent + NNN charges + equipment + labor + software + utilities) ÷ pallets stored that month = your cost per pallet.
Base rent alone on 10,000 square feet at the Los Angeles average is $13,600 a month (10,000 × $1.36). The same $13,600 would pay for 544 pallets a month at $25 ($13,600 ÷ $25 = 544). That sets the lease’s rent against the 3PL’s storage line only: the lease still needs NNN charges, racking, a forklift, staff and software, and the 3PL adds handling from $12 per pallet in and out plus its order fees. If your inventory averages well below 544 pallets, or swings with the season, the 3PL usually costs less. If you would keep a racked building much fuller than that all year, with staff kept busy, the lease can win.
Seasonality is where a lease costs most. Take a brand that stores 150 pallets for nine months of the year and 400 pallets during a three-month peak:
- Paying per pallet at $25: (150 × 9) + (400 × 3) = 2,550 pallet-months, or $63,750 for the year.
- Paying for peak capacity all year at the same $25 a pallet: 400 × 12 = 4,800 pallet-months, or $120,000.
The $56,250 gap is the cost of empty space in the slow months. A lease sized for the peak has the same shape: the rent in the quietest month is the same as in the busiest.
When should you use a 3PL instead of your own warehouse?
| Your situation | Better fit | Why |
|---|---|---|
| Under a few hundred orders a month | In-house, in the space you have | 3PL storage and order fees usually cost more than packing it yourself |
| A few hundred to several thousand orders a month | 3PL | Space and labor scale with orders, with no fixed staff |
| Inventory swings with the season | 3PL | You pay for pallets stored, not peak capacity all year |
| Space for months, not years | 3PL | Leases run for years; 3PL terms can be seasonal |
| Steady, high volume that fills a building all year | Own warehouse | Fixed costs spread over enough volume to beat per-unit pricing |
| Custom processes, light manufacturing, full control of staff | Own warehouse | Your building, your rules |
| Testing a new region or sales channel | 3PL | No lease to unwind if it does not work |
| Goods held under customs bond, chilled goods or food | A specialist warehouse | We are not a bonded warehouse, we have no temperature-controlled storage, and this is not an FDA-registered facility |
Can you rent warehouse space short term?
Rarely on a lease. Industrial landlords want multi-year tenants, so short term warehouse space usually means a sublease of whatever happens to be available, or a 3PL. To outsource warehousing for a season, rent storage by the pallet instead: on our card, from $25 per pallet per month, on terms that are not annual-only. Seasonal overflow, a few months between buildings, or inventory waiting on a launch are all normal requests. See short-term warehouse storage.
What are the disadvantages of a 3PL?
An honest list: you give up some direct control of the people and the process, you share the building and the dock schedule with other clients, and per-unit fees add up at very high, steady volume. Onboarding takes work, from SKU data to packaging rules to order integrations. Before you send inventory to any 3PL, ask to see every charge as its own line and to walk the building.
Where does Valencia fit if you need space in Los Angeles?
If you are looking at warehouse space for rent in Los Angeles because you need somewhere to put inventory, price the same pallets per month first. Our building is a 58,000 sq ft ambient, dry warehouse in Valencia, at the north end of Los Angeles County on the I-5, with inventory racked or floor-stacked: general merchandise, retail and ecommerce stock, packaging and print, apparel, and beauty and personal care products. See warehousing services, pallet storage and 3PL in Los Angeles for how it works, and the 3PL and pallet storage pricing guide for a worked monthly bill.
How to get a side-by-side number
Send your average and peak pallet counts, monthly orders, how inventory arrives, and how long you need the space. A coordinator prices each line in a written quote so you can set it against a lease quote. Ask for that side-by-side through the quote form, or call during business hours.
