With an average age of 34 years, US warehouses are due for a makeover, as the low clearance heights within the facilities and general design are not suitable for logistics companies which need higher ceilings for racking systems, according to a report by CBRE.
The rise in demand for warehouse space close to urban areas to better serve the fast-growing e-commerce sector has hit a road block as may traditional low-rise warehouses are now not fit for purpose according to David Egan, CBRE’s Global Head of Industrial & Logistics Research.
“I think we are going to start seeing more multi-storied warehouses when you can’t secure a land site in one of the densely populated locations,” he told Freightwaves.com
In Asia, multi-storey warehouses are a common site particularly in Hong Kong and Tokyo where the combination of high land premiums and population density restricts the availability of land for warehousing.
One idea is that the US could also look at retrofitting old office buildings and redeveloping old warehouses to better serve the fast growing last-mile delivery sector.
There was also congestion and backlogs at many US airports in 2017, with a shortage of air cargo warehouses compounding the problem.
George Lauriat, Editor- in-Chief of the American Journal of Transportation said: “Most US airports – particularly on the East Coast and West Coast are hemmed in by either development or ocean. There is not much room to work with and land prices are very high.”
He did point out that there are regional differences as both St. Louis and Houston have recently expanded their air cargo warehousing facilities. Miami airport has also looked to develop warehousing further inland to resolve the capacity shortage.
The traditional east coast airports have the biggest challenge as urban development now surround the airports in New York, Boston and to some degree Philadelphia.
Approximately 11 per cent of the total warehouse space in the US, around 93 million square metres, is more than 50 years old and has clearance heights of less than 6.1 metres. During the last 10 years, new-build warehouses have been generally three times bigger than traditional facilities, however this only accounts for four per cent of the total number of warehouses in the US.
Last year, more than 20 million square metres of warehousing space was developed, an increase of 12% year-on-year.
Egan concluded that the disparity between supply and demand is currently weighted towards warehouse owners as they have more control over their space, while making it harder for the occupier, as finding space becomes competitive and expensive.