U.S. vacancy rates for warehouse and distribution space are at a 16-year low – down to 6 percent, according to a recent report from JLL, a commercial real estate firm. One of the primary reasons for the increasing demand for space is the growth of ecommerce.
The trend is expected to continue. According to the “Warehousing 2020” report by Zebra Technologies, 87 percent of retailers surveyed say they expect to have more warehouses/greater expansion by 2020, compared to just 44 percent in 2015.
Ecommerce Warehouse Needs
What kind of space are these companies looking for? The warehouse has evolved from being simply place to store things to what Inbound Logistics describes as “an intelligent component of the entire global supply chain,” capable of accommodating the growing need for automated ecommerce fulfillment. As a result, today’s warehouses are now larger, taller, wider, smarter, and more flexible.
DC Design. Facility design has become more sophisticated. To increase storage density and maximize picking capacity, they now boast higher ceiling heights (36 feet and higher), narrow aisle widths, strategic racking systems, cross-docking operations, etc. They typically set aside more room for employees as well (offices, break rooms, parking, etc.).
Technology. State-of-the-art systems help to ensure optimal efficiency. Cloud-based order warehouse management systems and inventory management solutions ensure faster order processing, improved visibility, and the ability to accommodate a variety of order profiles under one roof.
Customization. Retailers need to adapt to market demands and satisfy an increasing demanding consumer – often turning on a dime to do so. Postponement strategies allow them to be more responsive by moving product configuration closer to the customer.
Location. Since ecommerce orders tend to be small package shipments, companies are starting to locate DCs in areas that lend themselves to small parcel service. Central locations like Memphis, Louisville, Columbus, and Modesto, Calif., make it easier to tap into these services; however, two-day ground service can often be a cost-saving option with strategically placed DCs, particularly with the looming rate increases proposed by express carriers.
Flexibility is critical in all aspects of warehousing as companies expand into new channels, increase order volume, add SKUs and more. Many companies are recognizing that a third-party provider can be a valuable resource, able to help them scale to suit their needs without a major investment in infrastructure.
If you’re ready for a new DC to support your ecommerce business, be sure explore all your options, including outsourcing your warehousing operations.
Ready to get started? Learn more about available space at Saddle Creek.