Is the Industrial Warehouse Shortage Temporary?

Warehouse space has become some of the most competitive real estate in the world over the past couple of years. National vacancy rates are at historic lows and sales for available industrial warehouses are sky-high. The warehouse shortage has gone on for over two years now. Many in the industry are wondering: will availability ever return to normal? There may be hope, sooner than some expect.

The Factors Influencing the Shortage

The factors that initially caused the warehouse shortage will play a major role in how soon the market bounces back. Unfortunately, these factors are connected to much larger global issues. The global supply chain crisis created a ripple effect that is causing a warehouse bottleneck. As a result, warehouses are filling up much faster than usual.

When the COVID-19 pandemic set in, consumers rapidly switched to e-commerce for virtually all of their shopping needs. E-commerce requires more warehouse space to begin with, but the wave of demand for imported and shipped products increased the strain on warehouses even further.

Global e-commerce sales hit $26.7 trillion in 2021, indicating that the popularity of online retail is unlikely to decrease. So, this particular influence will likely continue to pressure the warehouse market for the foreseeable future.

International shipping ports are operating at maximum capacity. When massive hauls of goods are finally unloaded from cargo ships, their first stop is a warehouse nearby. Ports are so congested that the stream of incoming freight for warehouses is virtually never-ending. This leaves very little time to clear out space before new shipments arrive, increasing the need for additional warehouse space.

How Warehousing Is Adapting

The global supply chain will take time to fully recover. Experts estimate it may not be until 2024 that things start to normalize again. As mentioned above, though, e-commerce has had a major impact on industrial warehouse demand and that is unlikely to decline. So, the warehouse shortage could go on until 2025 or potentially even longer.

Luckily, the industrial warehouse industry is already adapting to the shortage. In fact, shifts within the industry may shorten the timeline for recovery. By finding ways around key issues perpetuating the shortage, industry leaders are helping to get things back on track.

A prime example of this is the adoption of fabric warehouse structures. A major hurdle in mitigating the warehouse shortage is construction delays. The construction supply chain is under immense strain and most construction companies are understaffed today. As a result, it is taking longer than normal to build new warehouses. Alternate warehouses dodge this problem by simplifying construction and making new structures more affordable.

Similarly, warehousing companies are turning to unusual real estate for new building sites. Land to build new warehouses is beginning to run out in many high-traffic areas. This has led some within the industry to purchase unideal land for warehouse construction, such as an old water park in the Lehigh Valley.

Light at the End of the Tunnel

Warehousing innovations like these will help fill the industrial warehouse shortage. It will still take time for the market to fully recover, though. As mentioned above, industry experts predict the supply chain probably won’t bounce back until 2023 or 2024. The important thing to remember, though, is that sooner or later it will bounce back.

In the meantime, warehouse owners can make the most of their existing space by optimizing inventory management. Adding mezzanines is another popular strategy for making the most of available warehouse space. For those who do need new space, options like fabric structures and alternative real estate may be a solution to current industrial warehouse challenges.

A More Resilient Future

While the industrial warehouse shortage may be frustrating right now, it will likely lead to a more resilient market in the future. The warehousing industry will adapt to today’s challenge, streamline construction processes, and optimize space utilization. Once the market returns to normal, the industrial warehouse industry will be more resilient and resourceful than ever.

About the author

Rose Morrison, Renovated

Rose Morrison is a construction writer with a passion for sustainable building and innovative construction technologies. She is the managing editor of Renovated and regularly contributes to a number of reputable sites, such as NCCER, The Safety Mag, and Geospatial World. For more from Rose, you can follow her on Twitter.