Strong demand for more extensive warehouse facilities and the continuous expansion of the eCommerce industry have changed the way businesses store their goods. Warehouses were previously installed outside the city premises so goods could be delivered without any problems. But now that same-day shipments have become a norm, warehouse facilities are now at a premium, putting them closer to population centers.
“In the previous model, you didn’t need to move things all that quickly… In this compressed dynamic, you’ve got to push into cities and places where people live,” David Egan, Head of Industrial and Logistics Research, CBRE
According to the National Retail Federation, NRF forecasts that retail sales will continue to rise between 3.8 and 4.4 percent in 2018. Online and other non-physical sales are expected to increase between 10 and 12 percent. IHS estimates that eCommerce sales have grown exponentially for the past 15 years, slowly gaining its share in the retail industry.
A change in warehouse design
A massive change in warehouse design is also happening. According to a November report released by CBRE, the average new warehouse size in the U.S. built between 2012 and 2017 is 143 percent larger and 37 feet higher compared to the warehouses constructed between 2002 and 2007.
Multi-storey warehouses are also getting popular in the U.S. warehousing design. One of the country’s largest provider of logistics real estate, Prologis Inc., is currently constructing its first multi-story warehouse in Seattle, scheduled to open in the last quarter of 2018.
“Land is at a premium and warehousing rates are going through the roof… Folks want [warehouses] as close to a densely populated area as possible for same-day delivery,” Cathy Roberson, Logistics Trends & Insights Analyst
With the sudden boost of the warehousing market, the problem with space has become even more apparent. Traditionally, warehouses operate with multiple-year leases, which makes it ideal for peak season. However, it leaves unused space in off-peak season.
Flexe works like an Airbnb for warehouse space. It initially offered shippers options to find the warehouse space that they need. However, the marketplace has become more versatile, distributing project request to its network and warehouses can then bid on the project their platform.