By: Dan Smolensky, Supply Chain Solutions Group

We have been successful in obtaining extensive cost savings for our clients during the COVID crisis uncertainty. The recent boom in speculative development has left a tremendous amount of highly efficient space on the market with lower demand, generating tremendous cost savings opportunities for our clients and owners of commercial warehouse spaces.

Demand for warehouse space remains good but definitely softer than the pre-COVID environment. Driven by many factors, notably e-fulfillment, which in many cases require additional space closer to the end customer, more turns, more docks, and more trailer parking.

Pre-COVID experienced vacancy rates at historic lows, on average just 4.8% across the US in 2019, the same level as in 2018, according to data contained in the State of Logistics Report, warehouse developers are continuing to make investments. The report says that in Q4 2019 alone 100 million square feet of warehouse space came to market, an all-time quarterly record. The report notes that “With vacancy rates so low, tenants often lease any space they can find.” Today we believe there is a window of opportunity before the next bull rush to warehouse space.

Our clients have experienced extensive cost savings in the COVID-market utilizing our process.

If e-commerce grows at the 20% rate it has seen lately rather than the previously projected 14% growth, it will create demand for an additional 400 million square feet of space over the next five years.

If you would like more information or have any questions regarding the warehousing market, please reach out to me at dan@tmg-rea.com.

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