Warehouse space at a premium in America

First, the economic turmoil caused by the COVID-19 pandemic came for our paper products. Now it’s coming for our warehouse space. In the United States and throughout much of the world, warehouse space is growing scarce.

Just how bad is the shortage? Craig Fuller, the CEO of shipping analytics company FreightWaves, says that warehouses will ideally have about 15 percent of their capacity available and not in use.

In recent months, however, capacity has fallen below four percent.

Why the shortage? First, exploding real estate and land property values make acquiring new land prohibitively expensive, especially in and around ports. Personal consumption has also risen as Americans, among others, have gone on a prolonged shopping spree.

Meanwhile, in America’s biggest ports, COVID-19 caused cargo ships to idle and a massive backlog of shipping containers built up. Now, many shipping containers are making it to shore, but the influx is straining storage facilities, especially near ports.

A tight labor market and shortage of truck drivers and other logistics professionals are making it harder to simply move goods around. Warehouse space may be available outside of major logistics hubs, but moving products to where space is available is easier said than done.

Property developers are trying to increase capacity. However, it may take several months to make a dent in the floor space shortage and industry experts expect warehouse woes to continue throughout much of 2022. Real estate services firm CBRE says America used over a billion feet of storage space in 2021, up from 800 million a year before.