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Real Estate Space, the Final Frontier



Real Estate Space, the Final Frontier

May 3, 2022

[Real Estate] Space, the Final Frontier 

You might remember part of that quote from William Shatner as Captain James T. Kirk. The crew of the Starship Enterprise saw endless adventure in the limitlessness of space. Industrial real estate space is not nearly as adventurous nor is it limitless, but regardless, it may lead to some exciting times ahead. 

In the near term, 2022 rent expense is expected to increase by 7%. That is a 7% new cost that will need to be offset with productivity gains, resulting in decreased profits, or passed on to customers. In the longer term, CNBC reports that 1 billion square feet of new warehouse space will be needed by 2025. That is A LOT of increased demand. With increased demand and limited supply, it is fair to assume upward cost pressures will not go away anytime soon.  

What is driving this demand for space?

First, the current industrial vacancy is currently at record lows. So, supply is already constrained. 

Second, another culprit is the expected growth of e-commerce. That alone will create the need for 330 million square feet by 2025 per CBRE. 

Third, the demand for faster and faster deliveries is driving demand for smaller warehouses closer to the marketplace, akin to the e-commerce growth but using local delivery models rather than parcel shipments. Add to that the increase in demand for rapid delivery in businesses like food and beverage and you have new competitors for space.  

Forth, the large parcel carriers are adding space to handle the growth associated with an increased e-commerce business. Not necessarily warehouse space but it increases demand in the industrial real estate locations. 

Before taking on additional warehouse space, make sure your current space is used to maximum efficiency. As tempting as it may be, that doesn’t mean jamming everything you can into the building. As your warehouse gets too full, your operations can and will suffer, driving service issues and increasing costs. 85% capacity is a traditional benchmark before you start to lose operating efficiency.

A few things to consider:

Stop being a hoarder
The first thing to attack is the very slow-moving or obsolete inventory in your warehouses. It is taking up valuable space and not generating any income. It needs to go.  

Take it outside
If you don’t have the financial reserves to scrap non-sellable inventory, consider storing the material in storage trailers secured in your yard. 

Let the air out
Is your racking sized correctly for what you are storing? If not, make the adjustments and you’ll find some room. 

Play hot potato
Are you putting quick-turning inventory in racks that can be cross-docked? Cross-docking can reduce handling, increase velocity, and free up space in your storage racks.  

WMS option
If you have a WMS, is directed put away configured to control where the team puts up stock? If you don’t have a WMS, is it time to investigate one? 

Look to the sky
Be sure that you are using vertical space to your advantage. Would a mezzanine fit in with your process? Vertical lift modules can save space as well.  

Squeeze it
Very narrow aisle racking can create a lot of space. Therefore, it will likely require special equipment and may be further optimized with automated storage and retrieval technology.  

While the projections are consistent that the demand for warehousing space will continue late into this decade, the fact is that available space is already at record low levels. This is an opportunity to step back and look at your storage strategy today and prepare to make logical changes. There certainly is no one size fits all solution to improve your facility utilization; however, there are some consistencies, and the unique characteristics of your operation dictate what strategy provides the best benefit. In conclusion, any suggested projects to change the configuration and material storage strategy in your warehouse need to be viewed with the impact on the entire operation. 

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Jeremy Hudson

Vice President of Client Services

Jeremy’s focus is on the products and services clients need to stay competitive. Open Sky Group’s mission is to deliver technology-enabled solutions that allow our customers to achieve more while having the flexibility to adapt to change. Jeremy lives the core values and mission by bringing the best experience possible to our clients. He is an essential member of implementation teams, working alongside clients, and encouraging them to use innovation and best practices instead of customizations for success.

Jason Yantiss

Vice President of Client Services

Jason provides leadership to a variety of teams focused on implementation and integration. With 27+ years of experience holding operational and technical management roles in transportation, billing, and warehousing across a vast array of industry verticals, Jason is adept at driving multiple complex projects, understanding customer needs at all levels of the operation and providing viable solutions. Jason’s resume of 150+ implementation projects include Warehouse, Labor, Transportation, Yard Management and multiple AR/AP Freight Pay and Customer Billing systems. 

Eric McPherson

Vice President of Client Services

Mac works to oversee implementation and integration projects. A former Marine officer and military police officer, he brings over 27 years of supply chain experience, including 11 years at Blue Yonder in both delivery and service sales. Mac is a dedicated, team-oriented professional with a background in business management, professional services, customer service, and supply chain technology. His specialties include sales support, supply chain execution systems, project management, fulfillment operations, distribution operations, and GSA contracts.

Shannon Caflisch

Senior Vice President of Sales and Marketing

Shannon is responsible for the strategy and management of all sales, business development, and marketing programs. With over 25 years of sales experience and 15 years focused in the supply chain space, Shannon focuses on building strong relationships with clients and partners and strives to deliver the right software solutions to help conquer supply chain challenges. Shannon believes in learning by listening to understand clients’ goals, struggles, and what is important to their business to build lasting, successful relationships.

Alan Prillaman

Senior Vice President of Client Services

As Senior VP of Client Services, Alan oversees all consulting services and account management at Open Sky Group. Possessing over 30 years of combined industry and consulting experience, Alan leverages his unique background in IT, logistics, quality management systems, manufacturing and distribution operations, and facility and strategic account management to provide clients with creative resolutions to complex challenges. His core philosophy and passion are to deliver tangible value for and establish long-term trusted partnerships with our clients.

Mike Noble

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As Senior Vice President of Technology, Mike leads Open Sky Group’s Managed Services, Software Services, Infrastructure Services, and Information Technology teams bringing 35+ years of experience in Supply Chain Execution and Information Technology. Mike and his teams ensure we maintain the highest levels of customer service in a secure and reliable environment, constantly reviewing and evaluating new technologies, their appropriateness and applicability so we can safely and securely transact our own business – and help our clients accomplish the same.

Chad Kramlich


Joining Open Sky Group in 2015, Chad, served as Chief Revenue Officer for three years prior to his appointment to CEO in 2022. With over 25 years of experience delivering results for high-growth software and consulting organizations, Chad is leveraging his background in building efficient and effective implementation teams, establishing high-impact services operations, achieving revenue growth, and deepening executive-level client relations to help propel Open Sky Group into a very successful future.

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