Changing needs bolster demand for warehouse space

Becca Posner

National Public Radio recently broadcast a story about the demand for warehouse space in the United States.

 JLL, a prominent commercial real estate services firm, estimated 1 billion square feet of industrial warehouse space will be built by 2025.

The source for that kind of demand isn’t surprising. Consider that nearly everything we use passes through a warehouse — appliances, clothes, consumables, food, you name it. Meeting demand won’t be easy, however.

Doug Kiersey, one of the largest warehouse owners for the country’s biggest retailers, and Zac Rogers, a supply chain management expert from Colorado State University, explained this frenzy. Their take is that warehouses operated at a 93 percent to 96 percent occupancy rate before the COVID-19 pandemic, so there wasn’t a lot of space available. The need for such dramatic growth comes directly from well-publicized disruptions in global supply chains. These disruptions created what’s termed “doomsday storing” of goods by retailers. 

The previous “just in time” paradigm of inventory maintained the minimum amount of inventory to meet demand. Not anymore. Consumers expect their products to arrive within days, and retailers don’t want to be left unprepared. Now, the concept is “time costs money.” This new hoarding concept is the primary reason 1 billion square feet of industrial warehouse space is needed.

 Kiersey said it’s challenging to find land to build such structures and accommodate the concepts retailers want in their storage locations. It’s not as simple as it once was, when warehousing facilities acted as distribution hubs, and products moved through them quickly on their way to final destinations with manufacturers and consumers. The idea now is that a significant supply of goods must remain on hand so it’s readily available when customers place orders. Designers and architects are back at their proverbial drawing boards to create new spaces to accommodate these needs.

The increased demand for warehouse space doesn’t mean Grand Junction can support multiple new builds of 100,000-square-foot-plus facilities. At least not yet. Demand remains focused around ports and within cities that function as distribution hubs. 

However, significant new developments are under way in the Grand Valley. Notably, Grand Junction will be home to a Mosaic Modular factory, a 200,000-square-foot facility scheduled for construction beginning this spring.
A redevelopment project is underway at the former Ametek building off 27 Road on Orchard Mesa to create a multi-tenant property with about 85,000 square feet

More growth and development are likely to follow.