Despite the distance of time, the United States is still feeling the effects of the COVID-19 pandemic in the warehousing and distribution sectors. Consumers have grown accustomed to ordering online and selecting rapid delivery options — and their expectations are unlikely to change any time soon.
While soaring industrial rent prices and record-level site scarcity have adversely impacted many, they have also prompted the emergence of next-gen warehouse technology. Since expansion is no longer an option for many business leaders, they have been forced to reimagine their current spaces with solutions like multi-level warehouse storage or mobile racking systems.
Industrial space is in short supply. In the United States, the average rent for warehouse and distribution buildings was $9.72 per square foot in 2023, up from $8.10 in 2022 — a 20% price jump year-over-year. Indicators suggest it shows no signs of declining. While it has been steadily increasing for almost one decade, various factors have accelerated its growth.
This shortage is largely the inevitable byproduct of pandemic-fueled e-commerce growth. Recent shifts in consumer demand have also played a significant role, as many brands have been forced to accommodate two-day and same-day delivery options by changing where they fill and how they deliver orders to remain relevant in competitive markets.
Due to these factors, warehouse space availability is dwindling even in traditionally low-demand areas. Once all the desirable spots in densely populated urban areas were taken, business leaders hastily acquired sites in rural or logistically subpar locations.
Rober Thornburgh, the chief executive of the Society of Industrial and Office Realtors, admitted that the disparity between supply and demand is more significant than he has ever seen before. He went as far as to describe industrial space as “almost evaporating” before his eyes, claiming professionals are “lucky” even to know sites exist before they are bought up.
Since industrial sites are scarce, facility managers must reimagine their current spaces. Many are turning to next-gen warehouse storage solutions:
While a standard aisle generally measures over 10 1/2 feet, very narrow aisles range from 5-7 feet. This storage system’s dimensions are roughly half the size of conventional racks, meaning management can fit 30%-50% more products in the same space. Although it slightly limits maneuverability, modified material handling equipment can navigate narrow paths without issue.
Although a digital warehouse management system is not technically a space-saving technology, it can act as one. This stand-alone solution automates inventory recordkeeping, helping management predict fluctuations in demand. This way, mitigating overstock and stockout situations becomes more straightforward.
This next-gen warehouse technology is catching on because it enables inventory and space optimization. In fact, some warehouses experience a 70% increase in inventory accuracy and an 80% increase in product volume after deploying it. Since these systems require no layout or building alterations, they are cost-effective.
Limited space and zoning restrictions keep most facility managers from expanding to accommodate demand. A multi-level warehouse addresses this issue by building vertically instead of horizontally. Since it requires minimal alterations to the existing layout, it maximizes storage capacity without impeding vehicle or foot traffic.
In a standard warehouse, the ground level is around 32 feet high and contains multi-tier racking systems. A multi-story design consists of several additional floors, each housing independent picking and packing processes. It utilizes ramps, conveyor belts and freight lifts to enable loading and unloading at different points.
While data points indicate storage solutions like multi-level warehouses and very narrow aisles are some of the most effective options, some companies lack the resources to implement them. In these cases, temporary alternatives may be better:
Standard industrial shelving units do not offer the flexibility warehouses need when they are near capacity, turning every fluctuation in demand into a headache for management. Alternatively, mobile racking systems enable dynamic, high-density storage. Since they are movable, they can accommodate improvised layout redesigns.
While conventional mobile racking systems are simply wheeled industrial shelves, the next-gen warehouse solutions are mounted on motorized rail systems, enabling mobility at the push of a button. Workers, robots and forklifts retain unrestricted access. Moreover, decision-makers can certainly reprogram their automated retrieval systems to account for dynamic shelving.
Mezzanine decking is a sort of temporary multi-level warehouse solution. Implementing it is a sound business strategy if local building codes or budget restrictions prevent decision-makers from constructing additional floors. Here, workers use stairs to access higher levels. Each level conducts independent picking and packing processes.
Since mezzanine decking is temporary, it is dynamic — management can uninstall and reinstall these steel structures as their needs change. They can even use it as a walkway for very narrow aisles instead of as an independent level. If they need to accommodate automated retrieval robots, they can place ramps or conveyor systems alongside the stairs.
While many next-gen warehouse storage solutions are dynamic or mobile, installation requires time and labor that can impact standard operations. Decision-makers should use technology to anticipate consumer demand to avoid unnecessary downtime, moving to act as soon as it dips significantly. This way, they minimize the number of orders affected by delays.
Alternatively, they can take advantage of the post-pandemic surge in empty storefronts to house products during implementation. While these temporary storage spaces are not ideal, there is a surplus of them in many rural and urban areas.
Temporary walkways are a more straightforward solution. These elevated platforms allow workers to continue picking and packing orders while remaining out of the way of construction. While deploying these structures may affect operations, the impact will not be anywhere as near significant as other solutions’ installation procedures.
Warehouse managers who have held off on implementing next-gen technologies in hopes of outlasting soaring industrial rent prices and site scarcity may have to reconsider. While no one can predict the future, most indicators suggest this issue will persist in the coming years. For now, deploying a storage solution may be one of the best business strategies.
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