Blog / Warehouse Shortage Latest Crack in Supply Chain Armor
2 minutes read

Warehouse Shortage Latest Crack in Supply Chain Armor

Over the past two years, the global supply chain has seen its fair share of hiccups. Just as the logjams in Los Angeles and Long Beach, California, were cleared, Shanghai’s COVID lockdowns brought productivity at the world’s largest port to a crawl. We may not feel these delays for weeks or months– but the effect will be felt worldwide.

We’re facing supply chain uncertainty, while yearly global eCommerce sales are expected to hit $5 trillion for the first time in history. This perfect storm created the conditions for an unprecedented shortage in warehouse vacancies. Major markets across the United States are reporting vacancy rates close to zero, and rent is rising. JLL, a world leader in real estate services, recently released a study titled, The race for industrial space: Can supply keep up? In it, they report a 37% increase in rent from 2016 to 2021. In some places, rent is increasing by 50% year over year. 

When last-mile space is vital, urban real estate is essential. Industrial-zoned land in densely populated urban areas is shrinking, making new construction unlikely. And thanks to restrictions and supply chain issues, construction times are more than double what they were pre-pandemic– if you can find real estate. So, how can businesses in urban areas meet tight delivery timelines? 

JLL Research identified two innovative ways businesses are securing hard-to-come-by urban real estate. First, they note an increase in reuse and replacement projects. When big-box stores and malls go out of business, other companies adapt them into warehouse space. Multi-story warehouses are another way businesses make the most of available real estate in densely populated locations. 

Wealth Management quotes Alex Kachris, a New York City-based research manager for JLL, who claims, “Multi-story offers tenants buildings of scale embedded in the urban core and [these facilities] are built such that modern equipment and automation are able to be used within the facility, which is often an issue in antiquated product.” Modern equipment isn’t a given in existing warehouses– especially since the average age of industrial inventory in the US is 42 years old. 

George Bernard Shaw said, “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” Innovation is the answer in a world where it seems impossible for businesses to manage inventory as they once did. If you can’t build a new warehouse, find unused space. If you can’t find sprawling land to construct a warehouse, build up instead of out. Dare to think outside the box. When you do, you may find that “the way things have always been done” isn’t always the recipe for success.

We founded ShipRx on the principle that businesses shouldn’t just accept shipping contracts and costs at face value. Our parcel audit and parcel rate negotiation services set you up for success– leveling the playing field between carrier and shipper, so you don’t pay too much for the shipping services you need.

Mike Partner
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