Warehouse Rent Hikes Signal Evolving Market Dynamics

Warehousing costs are estimated to account for 13% of the total supply chain expenses, while last-mile delivery holds the largest share at 41% of the total supply chain costs.

9kwan Adobe Stock 298689111
9kwan AdobeStock_298689111

Warehousing costs are estimated to account for 13% of the total supply chain expenses, while last-mile delivery holds the largest share at 41% of the total supply chain costs, according to ITS Logistics’ Q1 ITS Logistics US Distribution and Fulfillment Index, Powered by Cresa.

“The 1.03% increase in the Producer Price Index (PPI) for warehousing and storage services from August 2024 to December 2024 reflects a modest upward trend in the costs associated with these services,” says Ryan Martin, president of distribution and fulfillment for ITS Logistics. “This increase could be attributed to several factors, including seasonal demand fluctuations, inflationary pressures, or higher operating costs such as labor, energy, or real estate expenses.” 

 

Key takeaways:

 

  • This growth suggests a stabilization and slight rebound in warehousing costs after the earlier declines observed in Q3.
  • Average asking rent across the United States also rose to $10.13 per square foot in the fourth quarter, which was a 4.5% increase from 2023 and a 61% increase from the fourth quarter in 2019.

“From a business perspective, this rise suggests that providers of warehousing and storage services are adjusting their prices in response to market conditions or cost structures,” adds Martin. “For customers, this highlights the importance of strategic planning and potential renegotiation of contracts to mitigate cost impacts. For service providers, the consistent increase reinforces the need to maintain competitive service quality while managing operational efficiency.”

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