When the COVID-19 pandemic struck, much of the country and the economy slowed to a crawl. A notable exception is the logistics industry, where warehousing and transportation operations were busier than ever. In fact, the eCommerce boom of 2020 has made warehousing harder to come by than any time in recent memory. In this article, we’ll look at current warehousing trends and tell you why a North Carolina warehouse may make sense for your company.
What’s happening in warehousing?
Across the U.S., the market for industrial space is growing rapidly. Speaking about the current warehousing market to Logistics Management, James Breeze, Senior Director, Global Head of Industrial Research for CBRE, said “The market is thriving, and with it, record high transaction volume (new leases, user sales and renewals), record high rents, a vacancy of 4.7%, and 42 consecutive quarters of positive absorption.”
With new records being set, construction of new industrial space has kicked into an even higher gear. There was over 312 million square feet of industrial space under construction in the U.S. as of Q3 2020. This will be added to the estimated 107 million square feet of space that was completed in 2020.
While this new construction may seem exciting to companies looking to expand, the competition for available space is fierce. In fact, of the 312 million sq. ft. under construction, 37% of that space has already been pre-leased.
What’s driving demand?
There are two main factors driving the demand for warehouse space: eCommerce and changes in how companies approach inventory. eCommerce was already growing rapidly with robust year-over-year sales increases. But the pandemic took that growth to warp speed. Online sales increased a whopping 44% in 2020 vs 2019. As the warehouse is the heart of every eCommerce operation, demand for new space has increased in lock step with the rise in sales.
As for inventory, the pandemic has caused companies to reevaluate their supply chains. Prior to the pandemic, most companies wanted less stock on hand, adhering instead to a ‘just-in-time’ model where goods arrive just as they are needed and then are distributed quickly.
The supply chain delays associated with the pandemic have altered this approach. Many companies are now keeping enough stock on-hand in order to weather the storm in the event of severe supply chain disruption. More on-hand stock requires more warehouse space.
Support your supply chain with a NC warehouse
If your company is looking for a new warehouse footprint, you would do well to consider North Carolina. The Tar Heel State was named the 2020 State of the Year by Business Facilities and was recently ranked by Forbes as the Best State for Business.
For starters, North Carolina has the available space that many other states lack. North Carolina also has plenty of room to expand. While competition for warehousing space is fiercer inside – and just outside – of the state’s major urban areas, North Carolina is also home to many rural regions that have grown mightily in terms of industrial space.
Rural Eastern North Carolina, for instance, has plenty of available space and is in a prime logistics location with access to I-95, the Port of Norfolk, the Port of Wilmington, and the brand new CSX Carolina Connector rail hub.
Other factors that make NC warehouse space so appealing include lower costs for industrial space, availability of qualified labor, and the state’s continued investments in its logistics infrastructure (i.e., roads, ports and rail).
Consider a 3PL to handle your NC warehouse operations
Of course, you can find your own NC warehouse space to buy or lease and then pay for the labor and equipment to operate it. Or, you can partner with a 3PL that already has the space and resources to accommodate your operation. Kanban Logistics is an Eastern North Carolina 3PL that offers both shared and dedicated warehousing options across more than 1 million square feet of prime logistics space. To learn more about the benefits of working with a 3PL warehousing provider, contact Kanban today.