LM    Topics 

As e-commerce grows, so does the height of warehouses, says CBRE

The phrase “things are looking up” may be an appropriate way to describe an ongoing shift towards the height and volume of warehouses and distribution centers, according to research released by commercial real estate firm CBRE.

In a client research brief, entitled: “Measuring Up: Why Cubic Feet Matter,” CBRE explained that large occupiers are more efficiently using warehouse and cubic space, which is resulting in increased building clearance heights, and has in turn, made measurement of cubic feet, or the “third dimension,” that much more important.

CBRE explained in the brief that taller warehouses exponentially increase the total volume of inventory available to occupiers, citing how:

  • since 2010, more than 8.8 billion cubic feet was added to the warehouse inventory of the top 10 markets;
  • the average height of warehouses built in the U.S. has gone up from around 24 feet in the 1960s to 32.4 feet this decade (33 feet in 2016); and
  • 13.7 billion cubic square feet of warehouse space was built in the U.S. from 2010-2016, with 65 percent of that total coming in the ten largest markets, paced by the Inland Empire in California, Dallas/Fort Worth, and Chicago, whereas newly-built warehouses by ground-level floor area yields 422.5 million square feet

A major benefit of additional vertical warehouse space, according to CBRE, is that e-commerce providers have leveraged that space by installing mezzanine levels that allow these companies to bring on additional human inventory pickers in each location.

But it added that comes with the caveat that these mezzanine levels are not usually included in the measurements of a property’s or market’s industrial square footage, making measuring cubic feet likely the more efficient way of gauging the full extent of warehouse and DC space.

Blaine Kelley, Senior Vice President of Industrial & Logistics for CBRE, explained that the move towards taller warehouses and DCs has really accelerated since 2010, when the industry really began to show signs of recovery.

“Another aspect is that on a ‘big picture’ level we have been supply constrained since 2010, as essentially speculative warehouse construction came to a dead stop in 2007,” he said. “Since the recovery, we have had anywhere from a 1.5-to-2 times the amount of demand to supply.”

CBRE research showed that the average clearance for all warehouse properties CBRE has built has seen steady gains, rising from 30.19 feet in 2010 to 32.95 feet in 2016.

When asked about the increase the installation of mezzanine levels by e-commerce companies that enabled them to add more pickers, Kelley said that the point of demarcation for that goes back to around 2010.

“It really directly parallels the proliferation of e-commerce warehouses being constructed around the country,” he said.

As for the future, in terms of potential continued growth of warehouses and DCs, Kelley estimated that the “magic number” for height would be 40 feet for clearance height. Anything above that number, though, he said, can lead to possible architectural or structural issues, coupled with fire protection issues as well.

“Anything above that (40-foot) number is a totally different category, which is probably cost-prohibitive today with the average warehouse operator,” he said. “And the equipment used in these facilities like lift trucks and other materials handling equipment is very expensive and can be cost-prohibitive in a larger facility.”

On an industry level, Kelley said that one complaint he often hears is that the market is very supply-constrained, along with difficulties finding sites to densely populated areas, which is leading to buildings getting bigger and taller.

“This is to meet the needs of same-day and next-day online orders,” he said. “You need to have a much deeper warehouse inventory to meet that demand.”

CBRE Director of Research and Analysis Colin Yasukochi said the industry is now also seeing the beginning of multi-story warehouse development, which he said is very common in Asia, but not as much in the U.S., although they are starting to crop up in more dense and urban areas.

Kelley said that there are currently some urban redevelopment projects along those lines taking place in Seattle and parts of New Jersey, which are constrained space-wise but are very populated areas. 

Article Topics

Industrial Real Estate
   All topics

Latest in Logistics

Uber Freight heralds various new customer-focused supply chain technology offerings
U.S. rail carload and intermodal volumes are up, for week of September 23, reports AAR
FTR Shipper Conditions Index takes a step back, from June to July
Prologis and Home Depot leadership address the capabilities of AI for logistics
ShipStation report examines holiday season shopping preferences
UPS preps to acquire MNX Global Logistics
Prologis research paper examines impact of various technologies on logistics real estate efficiency
More Logistics

About the Author

Jeff Berman's avatar
Jeff Berman
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review and is a contributor to Robotics 24/7. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis.
Follow Modern Materials Handling on FaceBook

Subscribe to Logistics Management Magazine

Subscribe today!
Not a subscriber? Sign up today!
Subscribe today. It's FREE.
Find out what the world's most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today.

September 2023 Logistics Management

September 6, 2023 · Logistics operations are facing a human capital crisis that poses a threat to both performance and competitiveness. In this year’s study, our authors explore how organizations can compete for talent in an increasingly limited talent pool; how organizations are competing in an increasingly dynamic business environment; and examine the technologies that shippers now need to use to stay ahead of the curve.

Latest Resources

Do More with the Same in Logistics and Distribution
Download this new white paper to learn best-practice strategies that can help your company do more with the same — optimizing your workforce to weather the current economic climate and pave a successful path forward.
Managing Global Complexity for the Long Term
Motor Freight Special Issue: Finding a way back to “normal”
More resources

Latest Resources

Driving ROI with Better Routing, Scheduling and Fleet Management
Driving ROI with Better Routing, Scheduling and Fleet Management
Improve efficiency and drive ROI with better vehicle routing, scheduling and fleet management solutions. Download our report to find out how.
Your Road Guide to Worry-Free Shipping Between the U.S. and Canada
Your Road Guide to Worry-Free Shipping Between the U.S. and Canada
Get expert guidance and best practices to help you navigate the cross-border shipping process with ease. Download our free white paper today!

Warehouse/DC Automation & Technology: It’s “go time” for investment
Warehouse/DC Automation & Technology: It’s “go time” for investment
In our latest Special Digital Issue, Logistics Management has curated several feature stories that neatly encapsulate the rise of automated systems and...
Why accurate, real-time location data is a must for efficient operations
Why accurate, real-time location data is a must for efficient operations
Find out how next-generation workforce management apps use accurate, real-time location data to power successful operations in this webinar with Radar CEO...
Should you lease or buy your lift truck fleet?
Should you lease or buy your lift truck fleet?
Leasing critical equipment like lift trucks can offer flexibility, but some lease terms can be complex and costly if you’re not...