The emerging battle for e‑commerce storage facility area

As business-to-business and business-to-consumer e-commerce continues to grow, makers, suppliers web merchants and others are going to be completing for more contemporary warehouse area.

“1.25 million square feet of logistics space is needed per $1 billion of annual incremental online sales,” says Adam Mullen, senior handling director, industrial and logistics, for CBRE Group Inc., a large Los Angles business property services and investment business. “This equates into approximately 184 million square feet of e-commerce logistics need by 2020.”

E-commerce companies are going to be defending new storage facility space versus themselves and others.Adam Mullen,

senior handling director

CBRE Group

But B2B and B2C business in need of newer and better automated warehouse had best be prepared to pay more for it, CBRE says. E-commerce is driving lots of warehouse leasing and sales offers nowadays. “About one-third of all our deals remain in e-commerce and we do a new deal somewhere on a typical day every eight minutes,” Mullen says.Adam Mullen, senior managing director, CBRE Group The size and cost of leased storage facility

area for an e-commerce business, such as a distributor or online retailer, are getting larger. In general, the size of the area for e-commerce business renting new storage facility area varies from 500,000 to 1 million square feet, Mullen says. In the past couple of years the expense per square foot of leasing warehouse has actually doubled in some markets to around$8, CRBE says.advertisement What’s driving rates higher is the aging of existing warehouse area.

The typical age

of a U.S. warehouse is now 34 years, and many older facilities do not have such fundamental functions as high ceilings, more load bays and bigger flooring area. Many e-commerce companies need these and other functions to accommodate more automatic supply chains, logistics management and order management, CBRE says.Although industrial developers and contractors constructed about 183 million square feet of brand-new warehousing space

last year, up from about 100 million brand-new square feet of space each year over the past decade, new area is still at a premium and e-commerce companies must complete with other entities for available flooring area.” E-commerce business are going to be defending brand-new storage facility area versus themselves and others,” Mullen states.

“It’s going to be that method for a while.” In addition to new storage facility space with bigger ceilings and more filling bays, e-commerce companies require great deals of parking space for big trucks and staff members and sufficient floor area to accommodate new logistics and satisfaction technology– consisting of robots– that can be scaled quickly to accommodate peak vacation demand.Warehousing area is tight, however also varies extensively for various areas of the nation, CRBE says. For instance, the general vacancy rate for the U.S. at the end of the second quarter was 4.4%, however ranged from of 13.2%in San Antonio, Texas, to 2.9%in Savannah, Ga., CBRE says.The typical expense per square foot nationally in Q2 was up about 5 %year over year to about $7.11, CRBE says.advertisement CRBE does not specifically track the impact the greatest online merchant– Amazon– has on the more comprehensive e-commerce-related commercial storage facility market.But Amazon has a huge and growing appetite for more area, especially for its 100 million Amazon Prime customers. In the U.S. Amazon runs329 storage facility centers– consisting of 124 satisfaction, return and extra centers– completely about 125 million square feet, states supply chain and logistics speaking with firm MWPVL International.As e-commerce companies contend

for available new industrial warehouse area, numerous business will make tradeoffs or decisions that serve their finest long-lasting interest, Mullen says.”If the facility is right in the town hall and the older storage facility is the very best place to serve the most customers the most effectively, that e-commerce operator might bypass a new space that may accommodate the most current

innovation,”he says.Sign up for a complimentary membership to B2BecNews, a newsletter released 4 times a week with coverage of innovation and business patterns in the growing B2B e-commerce industry. B2BecNews is owned by Vertical Web Media LLC, which also publishes, Web Seller and Web Health Management. Follow Mark Brohan on Twitter @markbrohan. ad Follow us on LinkedIn and be the very first to understand when new B2BecNews content is released.

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