smaller warehouse construction expected to see growth

Even though the era of large warehouses measuring more than 200,000 square feet continues unabated, some analysts say the need for smaller warehouse space is growing, largely because of the demands of e-commerce.

Looking at what it calls the “push for faster delivery” of e-commerce goods, the Wall Street Journal is reporting that e-commerce companies are looking at smaller warehouse options, particularly near large urban population centers.

Continues the paper: “More recently, businesses have been adding smaller fulfillment and distribution locations that put inventory closer to customers, who often expect items to be delivered in two days or less.”

This means that such companies will increasingly be relying upon warehouses measuring 120,000 square feet or less.

Not surprisingly, rents for smaller warehouse space in the last year have seen a 33 percent increase.

At the same time, according to the CBRE Group, the availability of existing smaller warehouse facilities nationally has declined from 11 percent of the warehouse market in 2014 to around 7 percent today.

But in an earlier report, the CBRE Group, which is based in Los Angeles and specializes in real estate services and investments, noted that much of the existing warehouse space is not up to current standards, with uneven floors, low ceilings, and inadequate docking.

By Garry Boulard

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