Why is there a high demand for more warehousing space?

Retailers demand for e-commerce solutions fuels need for more warehousing space

E-commerce is nothing new, but as the global economy recovers the booming demand for home warehousing and ecommerce boomdelivery is changing the face of industrial real estate with new fulfilment centres being designed to fit the demand from consumers to provide home delivery networks, either from online ordering or in store.

This new drive for 1 and 2 million square foot warehouses is causing a boom in both the building trade and the equipment industry as warehouses need to provide racking and forklifts suitable for heavier loads and higher ceilings, as the developers push traditional limits on high bays and mezzanine floors to maximise the usage with limited floor space.

Big Box Warehouse Storage

These ‘big box warehouses’ are usually located on newly acquired land away from the traditional industrial areas. Existing buildings are too small and unsuitable to be up scaled to meet the demands of the e-commerce giants, who are following the designs that have been set out by Amazon in the last decade.

Wal-Mart has firmly aligned itself to the new big box principle, having opened an 800,000 square foot warehouse in Fort Worth, Texas and they are opening a new warehouse in early 2015 in Bethlehem, PA which will exceed 1 million square feet. The move is to  enable the provision of the Walmart style of being able to shop at any time, in any place, with the use of online shopping on both PC’s , mobile and tablets.

Does warehouse location make a difference?

Traditionally large retailers would always look to locate their warehouses close to the major port in cities – ‘port-centric’ operations, but the demand for fast delivery from an online or in store option means that the major retailers are following a pioneering omni-channel approach where the total store inventory is available wherever the end user is based in the country.

There is still some nervousness about the investments being made in this area, with only selected retailers committing to the new methods of fulfilment, but with the evidence from Amazon blazing a trail through the traditional methods and the potential for high returns, investors are showing more and more interest in developing new retail networks. There are currently 50 million square feet of potential e fulfilment centres proposed or under construction in the US alone. Garrick Brown, director of research for Cassidy Turley, has stated that he is expecting there to be demand for 80 million square feet of similar warehousing in the US within the next 2 years.

 


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