{"id":1004727417,"date":"2024-09-04T03:01:42","date_gmt":"2024-09-04T11:01:42","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004727417"},"modified":"2024-09-09T07:12:07","modified_gmt":"2024-09-09T15:12:07","slug":"are-co-warehousing-solutions-a-game-changer-for-industrial","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/are-co-warehousing-solutions-a-game-changer-for-industrial\/","title":{"rendered":"Are Co-Warehousing Solutions a Game-Changer for Industrial?"},"content":{"rendered":"\n

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\"Exterior<\/a>
A Saltbox facility in Arden Hills, Minn. Data from the Small Business Administration shows a 26.3 percent increase in Minnesota\u2019s number of new business applications from December 2022 to December 2023, making it one of the fastest-growing states for small businesses. Image courtesy of Saltbox<\/em><\/figcaption><\/figure><\/div>\n\n\n

Co-warehousing solutions are rising in popularity as solid alternatives for the surging number of small businesses and users with short-term needs. More than 5.5 million new business applications were filed in 2023 alone, according to Census data, a record-breaking number.<\/p>\n\n\n\n

The same source shows that small businesses represent nearly 44 percent of the country\u2019s GDP, employing almost half of the country\u2019s workforce. Of course, their needs vary by industry, but a significant part of this economic force requires industrial space to operate, so it can benefit from co-warehousing solutions tailored to them.<\/p>\n\n\n\n

And recently, this industrial niche has become increasingly competitive, with large players creating their own brands of flexible warehouse solutions<\/a>. Others have chosen to specialize in certain segments, like e-commerce.<\/p>\n\n\n\n

Co-warehousing combines the full functionality of warehousing with the flexibility, convenience and predictable overhead of coworking, as Jeff Mirel, principal at The Rosenblum Cos., puts it. Businesses can focus on growing core operations because co-warehousing mitigates risk along with the inertia of equipping and managing a space.<\/p>\n\n\n\n

Following 1.1 billion square feet of industrial space delivered between 2022 and 2023, the national vacancy rate grew<\/a> to 6.4 percent in July, a recent CommercialEdge report shows. This, coupled with fewer large-scale, single-tenant deals, creates <\/em>new opportunities for the co-warehousing model.<\/p>\n\n\n\n

Where do co-warehousing solutions thrive?<\/h2>\n\n\n\n

Warehouse occupancy rates in New York\u2019s capital region stand at around 98 percent, with very few spaces where small businesses can operate from, according to Mirel. This pushed The Rosenblum Cos. to create Launchbox Flexible Warehouse Suites and provide support for the many self-employed operators in the area. The company opened its first co-warehousing location in Latham, N.Y., in March. Today, there are roughly 4,000 small businesses within 15 miles of the company\u2019s facility, spanning industries such as e-commerce, light manufacturing and creative arts and crafts.<\/p>\n\n\n

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\"Exterior<\/a>
Launchbox\u2019s facility in Latham, N.Y., provides suites that range from 150 to 1,000 square feet, along with support spaces and amenities like material handling equipment, daily carrier pickups and deliveries, a photo studio, meeting rooms with video conferencing tech, a kitchen, showers and high-speed Wi-Fi. Image courtesy of Launchbox Flexible Warehouse Suites<\/em><\/figcaption><\/figure><\/div>\n\n\n

Similarly, Saltbox\u2014another co-warehousing solutions provider\u2014has strategically opened its facilities in locations where small, infill logistics space is scarce and in high demand. The company currently operates in Atlanta, Dallas, Denver, Los Angeles, Miami, Minneapolis, Phoenix, Seattle and Washington, D.C. When asked where a new ideal location would be, Saltbox Co-Founder Maxwell Bonnie said that San Francisco, Chicago and New York would be his top picks because these markets are home to many innovative e-commerce brands that could use co-warehousing services to grow and scale up.<\/p>\n\n\n\n

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READ ALSO:<\/strong> First-Half Investor Darlings<\/a><\/p>\n\n\n\n

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Since the co-warehousing trend started gaining traction roughly five years ago, many large metros and land-constrained areas with fast-growing populations have been a common target for this model. However, given the evolution of small business growth, less dense areas are also starting to draw interest.<\/p>\n\n\n\n

The model is practical in any area with small- to medium-sized e-commerce companies, where firms need incubator space and logistics providers operate on a contract basis, believes Stephanie Rodriguez, national director of Industrial Services with Colliers.<\/p>\n\n\n\n

Is co-warehousing immune to industrial headwinds?<\/h2>\n\n\n\n

Since co-warehousing attracts occupiers that need smaller footprints, it’s more isolated from the ebbs and flows of the larger industrial sector.<\/p>\n\n\n\n

Today, there are much fewer owners and developers willing to spend money to acquire and build large facilities, Damon Juha, vice chair with Saul Ewing’s real estate practice, noticed. So, multitenant assets make much more sense in this context, as they allow developers and owners to hedge risks since they don’t need to search for a single, massive occupier.<\/p>\n\n\n

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\"Interior<\/a>
Jeff Mirel of The Rosenblum Cos. noted that co-warehousing can also provide a second life to older buildings. For its location in Latham, Launchbox repurposed an older, vacant property. The asset underwent a full gut renovation and deep energy retrofit, which includes a new building envelope, electric air source heat pumps to replace the legacy natural gas system and energy recovery ventilation for a healthier indoor environment. Image courtesy of Launchbox Flexible Warehouse Suites<\/em><\/figcaption><\/figure><\/div>\n\n\n

Additionally, co-warehousing operators can benefit from more competitive lease terms in markets where a significant amount of new speculative industrial space<\/a> has been recently delivered, Rodriguez added.<\/p>\n\n\n\n

This doesn\u2019t mean the niche is completely free of hurdles to overcome, however. The flip side of short leases and multitenant operations is that operators need to constantly seek new customers, while also having to differentiate from competitors. Even if more competition is welcome, Bonnie said, as it validates the model\u2019s success and recognition.<\/p>\n\n\n\n

Saltbox, for example, is laser-focused on the needs of e-commerce brands, tailoring its logistics services for them. It tries to differentiate itself by prioritizing accessibility, flexibility and a deep understanding of its customers\u2019 businesses.<\/p>\n\n\n\n

Still, there is a certain dependency on the traditional industrial market, Juha noted. If traditional owners have to become more flexible in terms of amenities, lease length and size of space, then there could be some downward demand on these sorts of spaces as the gap between traditional and co-warehousing narrows.<\/p>\n\n\n\n

How will co-warehousing solutions evolve?<\/h2>\n\n\n\n

With its focus on small businesses, co-warehousing lends itself to a more human-centric approach, Bonnie believes. This provides a value that’s hard to quantify, driven by accessibility and flexibility. Ultimately, it leads to higher client retention rates and more positive feedback.<\/p>\n\n\n\n

One area where there’s room for improvement, Bonnie continued, is onboarding. Ensuring that new members have a smooth transition and can quickly access all the advantages is key to maintaining that retention rate and creating a good tenant experience.<\/p>\n\n\n\n

Another area of growth for the co-warehousing<\/a> model is providing space to companies that wish to establish a toehold in a new market, including those looking to collocate with growing regional industry sectors such as the wind and semiconductor industries. Launchbox, for example, is the first American location for Instagrid, a German-based manufacturer of portable clean power systems.<\/p>\n\n\n

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\"Photo<\/a>
Photo studio inside Launchbox’s Latham facility. Offering multiple services is key to attracting small businesses from a variety of industries. Image courtesy of Launchbox Flexible Warehouse Suites<\/em><\/figcaption><\/figure><\/div>\n\n\n

Similar to the coworking industry, the co-warehousing niche can also benefit from technology enhancements such as access controls, payment management, reserving additional space and so on. What’s more, small industrial users also need to coordinate, move, ship and track inventory, and being able to do all of that via a phone app, for example, is of immense value.<\/p>\n\n\n\n

Additionally, with warehouse automation being a very costly investment for small businesses, co-warehousing operators can bridge that gap and offer automation as part of their services. Some examples include automated storage and retrieval systems, packaging automation and robotic forklifts, which can mitigate labor and inventory control challenges.<\/p>\n\n\n\n

All these potential avenues for improvement emphasize the growing strength of this niche. Mirel believes that demand for co-warehousing solutions will only grow in the future, as the number of small businesses continues to grow and their need for small, well-located, high-quality spaces that don\u2019t require a lot of upfront capital also increases.<\/p>\n","protected":false},"excerpt":{"rendered":"

We checked in on how the growing niche complements more conventional facilities.<\/p>\n","protected":false},"author":1284,"featured_media":1004727422,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21748,23891,21742,51037],"tags":[35498,46922,52480],"class_list":["post-1004727417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-industrial","category-national","category-latest","category-trends","tag-colliers","tag-saltbox","tag-the-rosenblum-cos"],"acf":[],"yoast_head":"\nAre Co-Warehousing Solutions a Game-Changer for Industrial? - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"CPE checks in with industry experts on how co-warehousing solutions have expanded and how the niche is likely to evolve.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/are-co-warehousing-solutions-a-game-changer-for-industrial\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Are Co-Warehousing Solutions a Game-Changer for Industrial?\" \/>\n<meta property=\"og:description\" content=\"CPE checks in with industry experts on how co-warehousing solutions have expanded and how the niche is likely to evolve.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/are-co-warehousing-solutions-a-game-changer-for-industrial\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2024-09-04T11:01:42+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-09-09T15:12:07+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/09\/Launchbox-Latham-N.Y.-facility-exterior-e1725286063634.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2719\" \/>\n\t<meta property=\"og:image:height\" content=\"2040\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Tudor Scolca\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/are-co-warehousing-solutions-a-game-changer-for-industrial\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/are-co-warehousing-solutions-a-game-changer-for-industrial\/\",\"name\":\"Are Co-Warehousing Solutions a Game-Changer for Industrial? 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