Retail Warehouse Shortage Could Worsen as Cities Mull Construction Bans

In the city of Colton, California, there are 54,000 residents and 58 licensed warehouses.

The city is in the state’s Inland Empire, just east of Los Angeles, where proximity to ports and railroads has made the region a hub for the nation’s supply chains — and where there’s a growing opposition among residents to the resulting construction, traffic and pollution, The New York Times reported Monday (Oct. 10).

Municipalities in the area — and in other communities across the nation — have been delaying projects in order to study their impacts and consider restrictions based on the facilities’ pollution, traffic and proximity to homes and schools, according to the report.

Business and labor groups counter that these regulations would reduce the jobs and taxes that are provided by the industry, as well as affecting the nation’s supply chains, which have already been struggling, the report added.

As PYMNTS reported Oct. 6, there’s currently less space to go around even as there’s an inventory glut across industries as well as consumer demand for rapid delivery — which requires getting the goods to where they’re needed and storing them for a time along the way.

See: Retailers Turn to Inventory Tech and Robotics to Ease Pain of Limited Warehouse Space

Companies of all sizes have been adopting solutions like using technology and data to optimize the efficiency of their supply chains, using retail locations to both store and deliver products, and deploying robotics and artificial intelligence (AI) to make the most of what warehouse space they do have.

As a result of the shortage of warehouse space, the average nationwide rental rate rose from $7.13 per square foot in the third quarter of 2021 to $8.70 per square foot this year, The Wall Street Journal recently reported, citing figures from commercial real estate brokerage firm Cushman & Wakefield.

Read more: Swollen Retail Inventories Leave Small Businesses Short on Warehouse Space

As PYMNTS has reported, firms are also working to offload reduce their need for warehouse space by offloading excess inventories and launching their holiday sales season early this year.

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