Warehousing On Demand
95% of the industrial leases we do are 5-10 years long. But that is changing as supply chains require more agility. Enough clients have expressed a need for extra storage, distribution or fulfillment space but not enough to warrant a long term 3PL contract or take a sublease, and not quite enough to require relocating the warehouse. And everybody knows that running two warehouses instead of one is never preferred. This is where we are excited to increasingly recommend warehousing on demand.
What is it? Warehousing on demand is excess capacity within a 3PL's warehouse. Not just excess warehouse, but excess racking, labor, and warehouse automation. You can sign up for 6 months for starters. That allows for peak season excess capacity, overflow storage, and/or climate controlled, frozen, hazmat, rail access, and more. You lease space on short term contracts until it is time to permanently expand, work through inventory, or outsource to a 3PL.
After evaluating the top warehousing on demand players, we landed on Flexe. Their network includes 800+ 3PL operators across 3,000+ facilities nationwide, accessible through a single integration. The economics in today's market make it worth your attention.
Four Takeaways for Your Operation
Warehouse space now has a spot market similar to freight -- About 15% of the total trucking market moves through spot channels in a normal year. Every shipper plans for it: contract 85% of lanes, leave the rest flexible. That exact same planning model applies to warehousing. The shippers who build a flexible capacity layer alongside their fixed footprint can outperform those who try to forecast their way into a single lease.
Warehousing on demand is underpriced right now -- 3PL operators who built or leased during the COVID surge are sitting on underutilized capacity and they need revenue, meaning that spot pricing has dropped. Fixed lease rates have softened but not as much because of the resilience of institutional developers for Class A properties. The gap between what you are paying per SF on your lease and what overflow capacity actually costs in the spot market is the widest it has been in years.
Fixed versus Flexible -- The paradigm shift is that you will still keep your regular warehouse. Now you can have additional space that is variable. Seasonal peaks. Tariff-driven inventory pulls. An acquisition that doubles your SKU count overnight. A forecast that came in 40% above plan. These are not lease problems. Committing to a three-year deal for a six-month spike is the single most expensive mistake operators make in their real estate strategy. Flexible capacity exists at scale and it is operationally real.
Broker fees covered -- Just like how our tenant rep services are paid by the landlord, so is your warehousing on demand broker fee. Our fee is baked into the deal. We help you negotiate between multiple flexible warehousing providers to find, structure and contract the best deal possible. This is another opportunity to earn your trust and walk the entire path with you end to end.
https://youtu.be/7cz-nSHx9Ro?si=N3tvXmLCQSFRTdyH
Watch the Full Episode
A quick introduction to what searching for warehousing on demand looks like.
Flexe's Regional Pulse pulls together vacancy, spot pricing, average rent, and labor cost for every major US market. The Inland Empire reads as a "Buyer's Market" with 8.8% vacancy and Low flexible warehousing demand intensity.
Plug in your storage volume, peak buffer, baseline utilization, and project duration. The calculator runs a side-by-side cost comparison between a traditional lease and the pay-per-use model. The illustrative example shown: a 133,300 SF operation moving 10,000 pallets shows $249,183 in annual savings, or 13%, on a 12-month engagement.
The network across our coverage area runs deep: 155 facilities in LA County, 111 in the IE West, another 44 in the IE East, and 27 in Orange County. Search by SF or pallet count, then filter by specialized requirements (food grade, climate controlled, hazmat, FTZ, bonded, rail access). Customers using a 6-month flexible solution vs a 1-year fixed lease in this market save $6 to $8 per pallet.
Our team has spent 22 years advising supply chain operators on their real estate decisions across the Inland Empire, LA County, Orange County, and Phoenix. That is our core business. Leases, renewals, acquisitions, dispositions.
But we also see the gap. Clients come to us with needs that do not fit a multi-year commitment. The seasonal spike that needs 50,000 SF for four months. The inventory pull ahead of a tariff window. The M&A integration that needs bridge capacity while the long-term network gets sorted.
Through our partnership with Flexe, we can now cover both sides. Fixed capacity through Lee & Associates. Flexible capacity through Flexe's marketplace. One conversation, one team that understands your full warehouse strategy.
Want to see how the math works for your operation?
Reply to this email and I will build a fixed-versus-flexible comparison specific to your footprint, your volume profile, and your market. No cost, no obligation. Just the numbers. Justin
Justin Smith, SIOR
MBA, MRED, MCR, MSCM Candidate ‘26
Senior Vice President | Principal
Lee & Associates | Irvine
C 949.400.4786
jbsmith@lee-associates.com (mailto:jbsmith@lee-associates.com)
Corporate ID 0104791 | License ID 01504494
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