Warehouse Space is Getting Critically Scarce Across the Nation

If you are having trouble finding space in a warehouse in the United States, you are not alone. There is currently an unprecedented shortage of available warehouse space across the U.S.

If you do manage to find space for rent, the rates are probably going to be higher than normal and the lease contracts may lock you in for longer periods. However, you aren't being gouged and the rates likely match exactly what the entire market is doing. The demand for warehouse space is simply that high.

In this article, we will look into what has caused this, what it means in the short term for both large and small businesses, and the potential silver lining that these hurdles could create.

The Perfect Storm

With the extreme turbulence faced by all in 2020, consumers began relying even more heavily on online retailers both big and small for even the most mundane items. With malls and traditional storefronts closed or restricted, everything from groceries to furniture to impulse buys became almost exclusively online purchases.

The increase in demand caused more retailers to shift their focus toward fulfilling these orders quicker and spawned new companies that rapidly began seeking to establish their presence in the revitalized digital marketplace. However, whereas in the digital world data is unlimited and growth potential is infinite, in the real world growth is much slower and storage space is much more finite.

Larger big box stores have been gobbling up as much warehouse space as they can, which is leading to a boon for the property owners who are getting longer contracts at much better rates. The scarcity of warehouse storage space in and around the larger port cities such as Los Angeles and Long Island has even led to an increase in interest in places like Savannah, Georgia, for instance. Although the port facilities are smaller, the fact that there was empty storage space nearby quickly led to many companies redirecting deliveries, which soon filled the warehouses as well as the docks. As the larger competitors struggle to locate adequate storage space, more and more constraints will be placed on the rapidly growing sector of small online businesses.

More DIY Businesses

While most of the world was spending time at home, many discovered that their hobby could, in fact, be a profitable skill. Things such as handmade soaps, artisan beard oils, and all sorts of specialty items require a place to be stored, processed, packed, and shipped from which puts small companies in direct competition with larger entities.

All of this is to say that even if coveted warehouse space can be located, it will likely not come cheap, and that could potentially affect either the price of goods or the survivability of entire enterprises that are just beginning to make a name for themselves in their chosen industry.

The Creation of New Space

One almost certain thing is that the demand that we see for space currently is only going to get larger, and that will undoubtedly lead to the creation of more warehouses.

Having said that, this all does come with one rather larger silver lining. Since this push will likely drive an abundance of available warehouse space, it could help businesses of all sizes if the trend of decentralization, or moving storage closer to the customer, continues to be implemented by more retailers. In turn, that would result in more much-needed career opportunities in fields like warehouse management, inventory and shipment processing, and order fulfillment (not to mention the construction and transportation industries that would also benefit).

Looking for a career in logistics? Click here to check out the open positions that Redwood currently needs to fill.

In a way, this may end up being a good problem to have, as it shows that commerce is growing strongly even in the unprecedentedly bizarre world we are living in and it has already changed the way companies think about localizing stock for online shoppers.