With vacancy rates at historic lows, on-demand warehousing adds new variable to the warehouse market.

Is your search for warehouse space turning
into a challenge? Are you concerned about the rising price per square foot as
competition on the warehouse market toughens?

The Warehowz infographic brings good news. While vacant
warehouse space is indeed at a historic low, according to JLL, the
true occupancy in many warehouses averages 70% to 80%.

This dichotomy in the warehouse market is tailormade
for innovation.

Let’s take a
closer look at what’s going on in the warehouse market.

At first glance, the current state of
the warehouse market may seem to line up challenges for small and medium-sized
businesses.

“E-commerce has created demand
for a new type of warehouse with different dimensions, locations and
capabilities than what most of the existing U.S. supply offers,” David Egan, Global
Head of Industrial & Logistics Research at CBRE, tells Supply Chain Dive.

The ferocious
growth of e-commerce means that every $1 billion in e-commerce sales
necessitates 1.25 million square feet as businesses shift inventory from
brick-and-mortar stores to warehouses, according to CBRE. By 2020, e-commerce companies will demand 184
million square feet of warehouse space at the same time as older warehouses often
lack features that those same companies need to support growth: automated
supply chains, logistics management, and order management.

Even though CBRE notes 183 million
square feet of new warehouse space was constructed in 2017 — a near doubling
compared to the year before — competition for space that includes high-demand
features (such as larger floor space, more load bays, and higher ceilings) will
remain fierce for years to come.

So, it’s time for the good news.

Despite the low vacancy rate on the
warehouse market, pockets of space remain unused within existing warehouses in
the United States — and they add up to a lot. According to a Warehowz analysis
and Legg Mason data, there
are 4 billion square feet of available space. That is 20 times larger than
Amazon’s distribution footprint.

But how does your business gain access to the space?

This is where innovation comes into
play. The need for short-term, flexible, and immediate access to space and
warehousing services has
resulted in the rise of on-demand warehousing companies — like Warehowz — that
seek to tie all of this vacant space together through technology platforms and
online marketplaces. In 2019 alone, on-demand warehousing companies are on
track to raise $60 million to $100 million, showcasing just how large the need
is perceived to be.

Let’s say you want to meet increased
demand for your products in the Southwest, but your new warehouse space is
under construction and it will be one to two years before it’s fully
operational. Hiring a 3PL would be another option, but the drawn-out negotiations
may cause you to lose out on a valuable market opportunity. You have, after
all, calculated the benefits of establishing your business right now. The
solution to your growth challenge is on-demand warehousing.

In a recent supply chain brief, Gartner
comments: “Economically, on-demand warehouses typically enable users to
replace the fixed costs associated with a long-term lease with short-term
variable costs, enabling a more agile supply chain that can ramp up and down as
demand fluctuates.”

Do you need warehouse space and services now? Warehowz can help.