The warehouse space crunch is getting worse – which could be a big problem for the holiday season
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The availability of industrial property, like warehouses, declined for the 33rd consecutive quarter in Q3 2018, according to a new report from CBRE, cited by The Wall Street Journal.
Available industrial property or property that's soon to be available as a share of total property hit 7.1% in Q3, which is the lowest rate since 2000 when it was at only 6.6%.
While the decline in available space has slowed recently — shrinking only one-tenth of a percentage point in every quarter since Q4 2017 — this news nonetheless spells trouble for retailers and shippers ahead of the holidays. Logistics companies and retailers typically use more warehouse space during the holidays to re-stock their warehouses with inventory a few months ahead of time.
That means the crunch could prevent at least some of these companies from loading up enough inventory into warehouses, hampering their abilities to quickly meet the seasonal demand surge.
Beyond just this holiday season, warehouse space is likely to remain tight for the foreseeable future, CBRE Chief Economist Richard Barkham, the author of the report, argued. He contends that a strong economy and skyrocketing online retail sales will make the warehouse space crunch the new normal.
Making matters worse, warehouse workers are in increasingly short supply and, even when hired, can have difficulty getting to far-flung warehouses. A dearth of public transit in rural areas means that workers often struggle to make it to warehouses, The Wall Street Journal reports.
Unfortunately, there are few solutions to these issues outside of accelerating investments in warehouse automation to handle more orders with fewer workers. Some firms have already done so and seen success — JD.com began operating a fully automated warehouse in Shanghai last October that is believed to be 10 times more efficient than a traditional warehouse, for example.