Supply chain managers should notice a continued decrease in warehouse vacancies as 2013 draws to a close. While the trend means some companies may have to look a little harder, or spend a little more when expanding, it is a good sign for distributors. In Cushman & Wakefield's latest release of market research data, it reported 14 consecutive quarters of declining vacancies in the warehouse sector of the industrial real estate market.
"Pent-up consumer demand for housing, automobiles, appliances and other less durable goods have translated to increased spending in 2013," said John Morris, leader of industrial services for the Americas for Cushman & Wakefield. "As corporations respond, we have seen a jump in demand, especially for distribution space. With the continued e-commerce boom, online retailers have become the fastest-growing segment of warehouse occupiers. At the same time, traditional brick-and-mortar retailers continue to drive demand as well, with companies like Wal-Mart and Home Depot among the most active."
E-commerce is likely one of the largest factors for an increase in warehouse space, as e-retailers continue to pop up and consumers take to the net for more purchases, especially during the holidays. Companies are also seeing an increased need for data collection.
More Warehouses Means Need for More Technology
As the need for more warehouse space grows, it also highlights the change in the distribution industry that is leading to the decline of vacancies. Large regional distribution centers are giving way to an increasing number of smaller warehouses that serve more specific markets. Some issues with the increasing number of warehouses for single companies is the need for better inventory control and systems that connect all locations.
According to RFgen's white paper, "Solving the Remote Warehouse Dilemma with High Availability Distributed Solutions," the traditional approach of maintaining multiple warehouse systems is no longer applicable. Traditional systems within each warehouse connect to the enterprise system, but not as a single system. Companies should strive to have data collection software that syncs directly with existing ERP systems so that more data is shared and the picture of the company's entire supply chain is more complete.
Data collection systems can help distributors improve control, even across multiple warehouses. These systems can also improve the ability to fill customer orders in one market with inner-branch shipments from a different distribution center. Advanced supply chain management systems improve a warehouse's ability to react to changes in supply and demand, such as the holiday shopping boom that can disrupt operations for e-commerce warehouses.