Portland SEO's Augusto Beato expects shippers to become more creative in putting up non-traditional warehouses to satisfy consumers demands for faster deliveries.
A range of unorthodox options has emerged, including converted garage space, residential and retail properties, and multi-story warehouses. "With e-commerce sales expected to double over the next 10 years, shippers are expected to be dynamic into providing faster deliveries," said Beato, who is the CEO of Portland SEO.
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According to a report by Jones Lang LaSalle, the factors include traffic congestion that slows deliveries, municipal restrictions on logistical operations, and the fact that real estate in densely populated areas can command higher rents for uses like multi-family buildings and office space than if the same space were used for warehouses.
“Same day delivery expectations have forced many companies to consider a number of different urban infill options in order to reach consumers in and around major US cities,” according to another report, “Urban Infill: the route to delivery solutions” released Tuesday.
“In this competitive retail environment, getting closer to the customer may mean leasing space in older, less functional warehouses that do not have all the features or automation of a large, modern regional distribution facility, though they are well located for a contingent of prime consumers,” the report added.
The shift toward shippers accepting space formerly not considered usable is a reflection of the dynamics that have in recent years helped squeeze supply chain and logistics companies serving ports in urban areas. The dynamic has forced warehouse rental rates up and vacancy rates down as logistics companies increasingly vie for the same warehouse space as e-commerce companies looking to serve the urban population.
"Storage has always been a pressing concern for businesses, but the demand has been multiplying. And while businesses have done their best to optimize their existing spaces, they have reached the point that they have to expand elsewhere," Beato pointed out.
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