loader

WAREHOUSE CONSTRUCTION IS INCREASING IN TEXAS AND CALIFORNIA - HERE'S WHY

LOCAL LOOK – WHAT THIS MEANS FOR YOU

2020 has brought a significant amount of change: change to the way we interact with each other, our families and friends, and especially the way we conduct retail transactions.

It’s safe to say that e-commerce is booming in 2020. And, this trend is showing no signs of slowing down anytime soon. A result of this boom is increased demand for warehousing space, demand that is being met by the steel building industry.

Where the Warehouses Are Popping Up Most

When you think about how the United States manages international shipments of bulk consumer goods, two states should come to mind: California and Texas.

But why?

It’s not just the fact that both California and Texas are major destinations for international freight shipments. These states are gateways to other markets throughout the country, and they also happen to have massive markets within them, as well.

The reasons why California and Texas represent such a large share of new warehousing construction also has to do with the following factors:

  1. Population Density. Wherever there are more people, there’s going to be easier last-mile shipments to be made by e-commerce retailers. The vast majority of the new warehouse construction markets that are leading the industry are located smack-dab in the center of densely populated cities. Los Angeles is one of them. Houston is another.
  2. Existing warehouse vacancy rates. One of the best indicators of new warehouse construction is going to be existing warehouse vacancy rates. The lower the vacancy rate, the higher the demand is going to be for new warehouse square footage. Here again, California and Texas both have warehouse vacancy rates that are at or below 4.5%.
  3. Cost for new construction. Obviously, it’s going to cost less to build a warehouse in an industrial area of inland California than it would be to build an equitably sized building in downtown New York City. The state governments of California and Texas are, generally speaking, very receptive to business development initiatives, which is why more and more investments are being made into new warehouse construction in these states.
Capital Steel Two Story Warehouse Building

The Role of Steel in the Boom

When a shipping, freight, inventorying, or logistics company is considering the best alternatives for the construction of new warehouse space, steel-framed buildings are consistently at the top of the list.

The reasons are numerous. Some of them include:

  • Larger overall building dimensions
  • More support-free interior spans (up to 200’ or more in some cases), allowing for better use of square footage
  • Faster construction timelines (up to 40% faster compared with traditional building types)
  • Easier permitting and zoning
  • Lower ongoing costs of maintenance
  • Lower building insurance costs
Capital Steel Warehouse Building