US commercial storage and warehousing have faced considerable volatility over the past five years, and recent policy changes have exacerbated historic seasonal sales cycles. From unleased and underutilized US warehousing capacity to increased costs, several trends are pushing manufacturers to increasingly rely on multiple distribution and supply chain partners to reduce warehousing liabilities.
Explore ways to assess the value proposition of new warehousing and distribution agreements, as well as the warehousing trends driving up costs in many regional markets.
Not All Square Footage Is Created Equally
The supply chain volatility of the past half-decade has reinforced the value of working with an experienced, global distribution partner. Many of today’s commercial warehousing trends can be largely offset by the flexibility and agility third-party distributors offer growing brands. Here are a few differentiators to keep in mind during any warehousing search.
- Location, location, location: In many cases, low-cost warehousing may be too far from ports, distribution centers, or manufacturing facilities to provide timely service. Isolated warehousing may also be more volatile as transportation costs increase. Tilley’s global presence, along with its mix of owned and third-party leased capacity, is strategically positioned to link suppliers to our customers.
- Specialty storage: Not all warehousing is food-grade or certified to handle certain materials. It’s vital to establish how a distribution partner’s owned or leased warehousing capacity aligns with your needs. With Tilley as your partner, we staff warehouse professionals qualified to handle diverse product categories while adhering to regulatory standards. We’re equipped to help you store with confidence or navigate the complexities of warehousing with ease. Whether you’re seeking reliable warehouse space or expert guidance on storage protocols, our team is here to provide the expertise you need.
- Tilley’s warehousing capabilities go beyond traditional shipping and storage: we offer value-added specialty services, such as quality control, blending, repackaging and more to support the unique needs of our customers.
Our capabilities have helped customers meet today’s unpredictable market realities, capitalizing on trends and turning challenges into opportunities.
US Commercial Warehousing Trends Overview
2025 was always expected to be volatile, due to substantially altered import policies directed at key US trade partners.
Inventory Is “Pulled Forward”
In anticipation of increased tariffs on imported goods, many US importers pulled forward normal inventory levels in Q1 2025. Across industries, retailers and manufacturers onshored more than $1 trillion from January through April 30, and non-service imports increased 11.49% to $3.6 billion. The quarterly increase during the same period in 2024-2025 was just 2.05%.
Imports of retail and durable goods, as well as finished food and beverage products and ingredients, pushed warehouse capacity to recent highs. However, inventory levels declined considerably through the second quarter of the year.
US Commercial Warehouse Storage Capacity Expands
Post-pandemic commercial warehouse capacity utilization expanded as supply chains realigned to normal operating conditions and demand. The warehouse vacancy rate increased to 7.1% in Q2 2025 as those substantial orders transitioned from storage to sales floors. Over the same period, tariff-related uncertainty led many retailers and manufacturers to put even reduced orders on hold, triggering both high vacancies and a surplus of warehouse space available for sublease.
New Warehouse Construction Slows
As warehouse vacancy rates hit 11-year highs, real estate developers paused or scrapped plans for new warehousing facilities in some regions. Some projects are still a go, especially those with smaller footprints. Demand for warehouse facilities under 100,000 square feet has been more resilient. Smaller facilities hold an average vacancy rate of 4.4%, while larger properties may struggle to lease space.
Read More: Inventory Levels: Economic Indicator or Not?
Average US Warehousing Costs Rise, Despite Vacancies
National average warehouse prices increased 0.9% in Q2 compared to the start of the year, and 2.6% compared to the prior year. In two regions, the Northeast and West, average prices declined 1.5% and 1.9% quarter-over-quarter, respectively.
Smaller warehouse facilities have significant pricing power, demanding average asking rents 31% above the price of larger facilities (100,000+ square feet).
How to Reduce Warehouse Costs
Proactive warehouse capacity planning and creative logistics solutions allow growing organizations to reduce warehousing and storage costs, unlocking financial resources to support more lucrative existing and new operations. As your dedicated distribution and logistics partner, Tilley Distribution will identify cost-saving opportunities and leverage regional proprietary warehouse storage capacity in key markets.
Take control of your current warehousing outlays with these action items.
1. Leverage the benefits of cross-docking.
Cross-docking is the process of transferring inbound goods to outbound networks immediately, usually at the same time or within hours of arrival. This improves warehouse turnover rates, reduces labor requirements, and shrinks square footage requirements for even large-scale manufacturing.
2. Focus on warehouse space optimization.
Use existing warehouse and inventory data to discover inefficiencies. Analyzing turnover rates, seasonal inventory peaks, and real-world demand vs. leased capacity can significantly lower costs. For example, laddering warehousing leases within a single facility or nearby properties allows brands to absorb seasonal inventory without ongoing commitments.
3. Compare vendor costs.
Work with suppliers and distributors that have leased and proprietary capacity, which can absorb storage and add value in other areas. Vendors with timely deliveries, proactive inventory management support, and consolidated purchasing often provide more competitive pricing. The right distribution partner may also offset administrative and staffing costs.
As US warehousing companies navigate uncertainty, manufacturers and retailers need to take ownership of warehousing, logistics, and supply chain optimization. The current environment – characterized by high vacancy rates and rising prices – suggests that warehousing costs are less responsive to traditional supply and demand forces.
Get the Supply Chain Support Your Organization Needs
Access reliable, world-class ingredients suppliers and a global distribution network engineered to support your growing organization. Tilley Distribution is heavily investing in connecting our customers to the specialty ingredients they need through proprietary resources in North America, Brazil, Europe, and Southeast Asia. See how Tilley can help your team thrive; contact us to speak with a Tilley representative today.
