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How New Retailing Trends Are Transforming the Warehouse

Blaine Kelly, senior vice president of CBRE's Global Supply Chain Strategy, details how retailers are shaping the supply-and-demand conversation for warehouse space and industrial real estate.

How New Retailing Trends Are Transforming the Warehouse

Retailers are on the “front edge” of a gradual economic recovery, Kelley said, especially those in the big-box sector. The trend is having a significant impact on the industrial real-estate sector. The search is on for more warehouse space, even as appropriate sites are getting harder to find.

The growth of electronic commerce is another factor contributing to changes in the warehouse. Most companies are shipping product in multiple channels, including traditional wholesale, brick-and-mortar stores and orders placed over the internet. As a result, warehouses need to be more flexible, in order to support the varying requirements of goods shipped by omni-channel retailers.

One solution is more sophisticated warehouse automation. That trend is requiring higher clearances within distribution facilities, and new layouts to minimize travel time for pickers. At the same time, says Kelley, more automation doesn’t necessarily mean fewer people. During peak shopping seasons, a facility could be employing hundreds of temporary workers, who need to be trained and managed for the relatively brief time they’ll be on the job.

Where is the industry in the real estate cycle? “We are in the spring, after coming through a long winter that started in 2008,” says Kelley. Last year saw a 1.5-percent decrease in vacancy rates. Currently the figure stands at 11.5 percent, and is likely to continue to shrink.

Kelley expects moderate growth in the 3-5 percent range for the next year or two. “This business is a leading indicator,” he says, “so it’s good news. This is a very positive time in our industry.”

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