Biggest U.S. Warehouse Market Running Out Of Space
America's largest warehouse market is full as major US retailers warn of slowing sales of the clothing, electronics, furniture, and other goods that have packed the distribution centers east of Los Angeles, Lisa Baertlein reported for Reuters.
Photo Insert: The sprawl of Inland Empire warehouses centered in Riverside and San Bernardino is visible from space.
The merchandise keeps flooding in from across the Pacific, and for one of the busiest US warehouse complexes, things are about to get worse.
Experts have warned the supply chain would get hit by the "bullwhip effect" if companies panic-ordered goods to keep shelves full and got caught out by a downturn in demand while shipments were still arriving from Asia.
In the largest US warehouse and distribution market - stretching east from Los Angeles to the area known as the "Inland Empire" – that moment appears to have arrived.
"We're feeling the sting of the bullwhip," said Alan Amling, a supply-chain professor at the University of Tennessee.
The sprawl of Inland Empire warehouses centered in Riverside and San Bernardino counties grew quickly in recent years to handle surging demand and goods imported from Asia.
That booming area, visible from space, anchors an industrial corridor encompassing 1.6 billion square feet of storage space that extends from the busiest US seaport in Los Angeles to near the Arizona and Nevada borders.
That much storage space is nearly 44 times larger than New York City's Central Park and 160 times bigger than Tesla Inc.'s new Gigafactory in Texas.
But a consumer spending pullback now threatens to swamp warehouses here and around the country with more goods than they can handle - worsening supply-chain snarls that have stoked inflation. Retailers left holding unwanted goods are faced with the choice of paying more money to store them or denting profits by selling them at discount.
Inland Empire warehouse vacancies are among the lowest in the nation, running at a record 0.6% versus the national average of 3.1%, according to real estate services firm Cushman & Wakefield.