Small Boxes to Big Boxes: Warehousing Need Is Booming

March 28, 2016

As the U.S. economy heads into the end of the year’s first quarter and the rapid growth in e-commerce continues its momentum, so does the need for increasingly larger warehouses.

According to a report from commercial real estate company CBRE Group, online transactions are on pace to account for more than 10% of all U.S. retail sales by 2017. That’s up from 6.2% in 2013. And evidence of increasing demand for big-box warehouses—those with more than 300,000 square feet and 28-foot ceilings or higher—is rapidly expanding, according to real estate brokerage firm Colliers International Group.

Last year alone in the U.S., Colliers estimates that the amount of warehouse space constructed totaled 61 million square feet. For 2016, Colliers predicts an additional 74 million square feet of warehouse construction.

Warehouses Being Built on “Spec”

Southern California, for example, with its dense population and major seaports handling international goods, is a huge e-commerce hub. As a result, developers are in a race to construct warehouses for online retailers. Some warehouses are even being constructed on “spec” in anticipation that a retailer will be ready and waiting to rent the space once it’s completed.

Newegg Inc., based in City of Industry and the second-largest pure-play online retailer after Amazon, continues to experience explosive growth. It now has eight fulfillment centers in North America, with the most recent built far from California in Indiana.

In Southern California alone, more than 16 million square feet of industrial facilities is under construction in Riverside and San Bernardino counties, accounting for about 14% of all industrial space being built in the entire U.S.

Demand Continues From the Midwest to East Coast

In the Midwest, the Wichita, Kansas area has experienced increasing demand for warehouse space as well. Last year, Air Capital Delivery and Warehouse began construction on a 250,000-square-foot warehouse. Along with buying a 450,000-square-foot building in 2014 to add to the company’s already existing 900,000 square feet of warehouse space, the company now boasts a total of 1.8 million square feet of warehouse space for its customers.

In eastern Pennsylvania and New Jersey, 13.3 million square feet of warehouse space is under construction in that region as well.

And as the growing amount of consumer spending in the U.S. occurs online, traditional retailers like Home Depot Inc., Target Corp. and Wal-Mart Stores Inc. are all constructing massive fulfillment centers in order to keep up with the demand for packing and shipping online customer orders.

Along with big-box warehouses, there exists a growing interest among some retailers for warehouses under 200,000 square feet in higher population areas that cater to making deliveries to customers within hours, instead of days.

4SIGHT’s Unique Perspective

Whether you’re currently operating, or even considering building or buying a small- to medium-size warehouse—or even one that’s 300,000 square feet or more—4SIGHT Logistics Solution yard and dock management system will ensure your facility is operating as efficiently and safely as possible to maximize your return on investment.

Warehouses in excess of 300,000 square feet certainly present their own unique set of challenges. Not only are you faced with efficiently managing a huge volume of interior warehouse space, you’ll need to effectively monitor every activity that’s occurring around the warehouse perimeter, especially your most vital areas: the loading dock and the yard outside of your warehouse walls.

With such big-box warehouses requiring 100 or more loading dock doors, it becomes increasingly difficult to keep track of all your operation’s moving parts. 4SIGHT Logistics Solution is uniquely positioned to simultaneously manage your loading dock and yard’s logistical requirement through collecting critical equipment analytics, remotely monitoring and controlling dock doors as well as providing accurate, real-time tracking of yard trailer and tractor activity.

As you continue to evaluate your warehouse, yard and dock management needs—from new construction to expanding or improving your existing operation—we look forward to helping you achieve your warehouse operational goals.

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Most users see an ROI with 4SIGHT within 12-16 months. However, some users have seen an ROI as quickly as 6-9 months.