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Tips for choosing the right warehouse

Warehouse space is in big demand as companies adjust to the uptick in e-commerce orders, ongoing labor constraints and other pandemic-driven fulfillment challenges. 

“As retailers and logistics companies try to stockpile goods to hedge against supply chain problems, they are facing a new challenge: In many parts of the United States, there is little to no space available to stash the merchandise,” the New York Times reports. 

“The shortage of commercial warehouse and industrial space is the latest fallout from pandemic-fueled growth in online shopping and shows few signs of abating,” it continues. “But the squeeze is spurring new thinking about how to manage storage, handle distribution and set up new delivery systems for everything from pet food to beauty supplies.”

Vacancies Down, Rents Up

By CBRE’s latest count, warehouse vacancy rates are currently at an all-time low and aren’t expected to improve anytime soon. Companies purchased or leased more than 1 billion square feet of industrial and logistics space last year—the largest annual gross amount recorded since CBRE began tracking the figures in 1989. “The mad scramble for warehouse space that ensued last year drove vacancy down to just 3.2%, the lowest rate on record,” Chain Store Age reports.

These trends have forced shippers to sharpen their pencils and rethink the warehouse selection process, which can play a significant role in the success of their end-to-end supply chain management processes. The fact that most existing warehouses are old and can’t always live up to the needs of a modern distribution organization makes the selection process that much more critical. 

Using JLL, Inc.’s numbers, FreightWaves estimates that the average industrial warehouse in the US is now 42 years old, and that 75% of all industrial facilities were built over 20 years ago. In Chicago, for instance, the average warehouse age is now 48. In New Jersey, that number is 56.   

Dealing with Aging Warehouse Stock

With the US supply of logistics warehouses growing older, these aging facilities often create issues like inadequate trailer space, an insufficient number of dock doors, obsolete floor slabs and lack of access to suitable power and sprinkler systems. Much of the older stock of logistics warehouses is being torn down and rebuilt, rather than the structures being modified, FreightWaves reports. 

For best results, companies should choose facilities that are both well maintained and are equipped with (or can be readily equipped with) modern technology and automation. Location always has and continues to be another important factor to consider, along with available capabilities like transloading, rail access and proximity to major highways.

Other key considerations include sales or lease price (including taxes); area workforce availability and costs; proximity to airports and seaports; and any other local market factors. Ideally, for example, your new facility will be situated near key suppliers and/or customers. This will help minimize order lead times, lower freight costs and help speed up your supply chain. 

The focus needs to be on resiliency, says Rick Ehrensaft, chief commercial officer for Odyssey Logistics’ Consumer Warehousing.  For more information on Odyssey’s warehousing and transloading solutions contact one of our experts today. 

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