Warehouse Rents Are Rising: How Is This Impacting the Supply Chain?

The cost of warehousing in the U.S. is skyrocketing. What’s driving this sharp price increase, how is it impacting supply chains, and what can retailers and manufacturers do to mitigate the impact on their bottom lines? What’s The Current State of Affairs? A report released at the end of 2021 by real-estate firm CBRE Group Inc. found that the rental rates on expiring multi-year warehouses leases are increasing at a rapid rate. According to the research, the cost to rent an industrial property is up by an average of 25% compared to the rates being paid at the end of five-year contracts that expired in 2021. John Morris, industrial and logistics lead at CBRE, commented that the company has never seen rent increases this high. So, what’s driving this surge in cost? Why Are Warehousing Costs So High? Following the outbreak of COVID-19, consumer behavior transformed. The UN’s trade and development experts (UNCTAD) revealed that the e-commerce sector saw a dramatic rise in its share of all retail sales — from 16% to 19% in 2020. Meanwhile, in May 2021, it was reported that global e-commerce had risen to $26.7 trillion. In the U.S. alone, the knock-on effects of COVID-19 saw $105 billion added to the economy from e-commerce. 

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