Through a trend called “on-demand warehousing,” some big retailers are turning to “pop-up” warehouses and short-term leases to become more flexible in volatile and uncertain markets.
As The Wall Street Journal reports, the idea is to tap into unused space in a crowded U.S. industrial real estate market where distribution centers near population hubs are fetching a growing price premium. Retailers and manufacturers are trying to position goods closer to customers without getting locked into long-term contracts or multi-year leases without knowing how customer demand is going to shake out.
“They know they are going to see peaks and valleys, and they’re tired of making investments over the year,” says Adam Mullen of the CBRE Group.
While public warehouses have offered space on a short-term basis for years, on-demand warehousing offers a high-tech twist on traditional customer order methods. Warehouse operators who worked with Walmart, for example, handle hiring and other administrative tasks for three pop-up spots and Walmart avoids paying year-round for space it would only use during peak season.
The trend also allows large companies to address growing uncertainties from global trade tensions.