The Need for Vertical Warehouses – Newark NJ Industrial Property for Sale

Newark NJ Industrial Property for Sale

With business growth comes new challenges. Especially for those based in the population-dense northeast USA. Companies are not only pressed to outdo each other but also to keep deriving quality up and prices down. The quest for competitive advantage also requires staying abreast with technological updates, follow a constant need for innovation, and to stay a step ahead of the competition.

One of the ways to achieve these goals effectively is to restructure the supply chain in a way that results in efficient logistics process, without having the need to restructure the entirety of the supply chain. The most viable solution out of such a situation comes down to building warehouses that are smarter rather than bigger – that is, vertical warehouses!

Why a Vertical Warehouse?

The growth of business results in the need for higher storage spaces. Marketing departments may generate higher market potential, financing may enable higher capacity for production, and the manufacturing process itself may become more efficient. But the purpose of all these efforts may go askew if the warehouses cannot accommodate the growing demand for the products. Hence, it could rightly be deduced that logistics activities influence business growth directly. The increased demand through e-commerce has brought on the effect trifold.

Taking Newark, New Jersey for instance, like any other bustling cities of the US, it is becoming overwhelmed in its areas of industrial zoning. There is a chronic land shortage, resulting from the ever-expanding businesses and growth. The prices for space within the city are sky-rocketing, especially compared to the steeply discounted large spaces outside the city boundaries into the outskirts, where it is easier and cheaper to acquire land to build large warehouses. The government has new land restrictions in cities to bring down traffic congestion. All these factors work towards the idea of building large warehouses outside the city boundaries, if for nothing else then to accommodate growing demand and to the keep property costs under control.

This, however, is not as easy as it seems. There is a pressing need created out of changing consumer patterns. Not only has the scope of e-commerce grown tenfold, but also there is an increasing demand for making deliveries on short deadlines – with the heightened pressure on businesses to manage deliveries the same day! The business which lags behind in picking up the trend would obviously lose on orders to their competitors who manage the same-day deliveries efficiently. This pushes the businesses to utilize the warehousing options within the city so that the deliveries could be made timely and customers are retained. It all circles back to the vertical warehouses.

Another incentive to the movement towards the vertical warehouse from the conventional horizontal ones is the saving in the transportation cost that is experienced as an outcome of vertical structure within the urban boundaries, compared to long-distance larger ones. An Australian study noted that in so far as the logistics are concerned, transportations make up 50 percent of the cost, whereas the rental expense only comes down to 4% to 7% of the cost. It has been said that”this makes proximity to core markets a critical consideration for occupiers,” and “in a land constrained city like Sydney – where a lot of industrial product was redeveloped into residential buildings – building vertically is the only logical next step”.

The Success of Vertical Warehouses

As an example, a provider for swimming pool equipment, Astralpool Australia, has been reported to have said that use of vertical warehouses had increased their picking efficiency by 40%. Additionally, their production also became more efficient as quantity of employees per department came down to one, out of six. This would drive down the payroll costs too, in the longer run. The added incentive of a reduction in the staff costs compel the businesses in choosing a vertical option rather than a horizontal out of the city space.

According to a survey in 2017, 46 percent of consumers looked for the option of delivery the very next day of their placement of order or making a purchase – which is 3% higher than the last year, in accordance with the Online Shopper study conducted by UPS Pulse. Moreover, the same study identified that the consumers expecting the same day delivery made up 20% of the consumers, an increase of 4% over the last year.

It is becoming so increasingly important to the customers as a class that they do not grudge paying extra for the benefit of same or next-day delivery. As the study by McKinsey and Company identifies – in 2016 alone, one-fourth of the consumers and one-third of the millennial shoppers were found willing to pay a substantial premium for the benefit of instant delivery, or delivering the same day. As Kosser says, “It’s not about cost at a certain point — it’s about getting to customers by a certain time,” the high rents in the urban industrial areas seem rational.

In short, companies could do much to take inspiration from examples like that of Amazon which is seeking to obtain a patent for building a vertical warehouse which seems more like a skyscraper as a result of an increase in the demand for industrial space as an outcome of more Americans searching for online retail options. The company, together with other retailers, is looking to revamp its supply chain while looking at warehousing space in a different context.

Amazon reports that its shipping costs in the prior year have doubled compared to the figures quoted two years prior. The shipping costs in the last year alone totalled $2.17 billion. It is exactly this exponential increase in the costs that the planned efficiency of supply chain revamping seeks to avoid.

Prologis Georgetown Crossroads looked forward to opening what its Website labels as “the first multistory warehouse in the United States” in a locality which isn’t much farther from downtown Seattle. The 590,000-square-foot, three-story, warehouse from the ground up boasts of 410,000 square feet of devoted fulfillment space intended for e-commerce purposes. Prologis San Francisco and New York are about to receive similar developmental treatment.

Another example worthy of mention is that of the managing director of Cushman & Wakefield, Ben Conwell, who also happens to be leading e-commerce advisory group is reported to have said, “Let’s build a couple distribution centers, stack ‘em on top of one another, and then we’ll figure out how to make buildings with a smaller footprint work.”

Opportunities for Warehouses in Newark, New Jersey

Vertical warehouses are found more commonly in Asian countries, but due to the factors explained above, they are increasing in the United States. For instance, in Newark, New Jersey, industrial property for sale has gone up and an increasing number of industrial property businesses have been putting up vertical warehouse spaces for rent. One such example being Blau & Berg. If one happens to find themselves looking for industrial property for sale in Newark, New Jersey, the following may be helpful. These happen to be vacant currently, while also having the additional benefit of offering lease terms, which are negotiable.

For a company operating in East Newark, New Jersey, an industrial property for sale in the form of a warehouse can be found for an annual rent of $10-$12 per square feet, with the space availability of 15,240 square feet, with the total land area of 35,776 square feet. The availability currently is in one story, with the singular drive-in bay.

An alternative option in West Newark, New Jersey for an industrial property in the form of a warehouse could be found over the land area of 10,890 square feet, for a building size of 9000 square feet. The annual rent for such a property could be found at $8-$12 per square feet. The additional utilities included are gas, water and heating; 30 surface parking spaces; wet sprinkler; a fenced lot and a crane.

Another option in West Newark, New Jersey is that of Industrial warehouse property with a building size of 10,000 square feet and a land area of 10,999 square feet. For this one-story building, no much of the amenities are available, however, the annual rent is fixed at $6.5 per square feet annually.

Let’s Sum it all up!

Today’s supply chain management requires smart warehousing solution to boost speed, efficiency and inventory location flexibility. In order to do so and reduce cost several industrial and automotive companies have come up with an all in one solution; vertical warehousing.

It enables to store inventory in a system that will bring what you need to you at the push of a button. Mostly used in industrial and automotive application, vertical storage is a great solution that can be customized according to your supply chain needs. The major benefits of vertical storage are;

  • Saves space; vertical storage gives an advantage to use less space to store more goods which can be used for additional revenue-generating activities. It even allows you to store large quantities in a restricted area of land.
  • Increases productivity; goods are mostly picked through lifts and machinery, therefore, fewer people are used to make efficient operations and faster service times.

So, vertical storage and warehouses could be the future for successful supply chain operations in Newark, NJ. If you are currently looking for an industrial property or warehouses for sale in Newark, NJ, you can check Blau & Berg and get the most economical and affordable rates.