OVERVIEW
The logistics industry is facing a scarcity of available storage space, and the challenges don’t appear to have an ending in the near future. For manufacturers, retailers, and 3PLs, there is little to no space available in the United States and Canada. The shortage of commercial warehouses and industrial space is forcing new and creative thinking on how to manage storage and distribution.

In order to secure space, operators are inking deals for facilities long before construction even begins. New regions are being developed much further from the coastal ports than in history – areas such as the Lehigh Valley, Pennsylvania as well as Reno and Las Vegas, Nevada.

Construction and land costs are both climbing, and vacancy is a couple of percent at best in most markets. There is pent-up demand so absorption will continue to be strong for some time. Unlike ocean and truck rates, industrial space is less cyclical. Where normalization in transport could be coming in 12-18 months, leases are closer to 7-10 years.

For manufacturers, whether self-fulfilled or within a 3PL, the importance of inventory turns, reduced carry over, and the true climbing cost of dated inventory must be stressed.

The tight warehouse market will continue to push manufacturers and 3PLs to employ new strategies for storing and moving goods across the country. Making commitments earlier and having operating partners and systems in place that are scalable, flexible, and forward-looking will be key to success.