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With more warehouses in America than ever, how are there still not enough?


Nearly everything you buy - your couch, your phone, even your floorboards - passes through a warehouse on its way to you. Warehouses have become a key link in America's supply chain. And they're now bursting at the seams, overcome by our pandemic shopping demand. NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: Doug Kiersey has been building, buying and leasing warehouses for almost 40 years. He's never seen a time like this.

DOUG KIERSEY: It is incredible. It's completely unprecedented.

SELYUKH: Kiersey is the president of Dermody Properties, which owns warehouses used by some of the country's largest retailers.

KIERSEY: In some markets, we're over 99% occupancy. Think about it.

SELYUKH: Ninety-nine percent occupancy, meaning basically all the warehouse space is claimed, packed to the gills. So how did that happen? Here's Colorado State University supply chain management expert Zac Rogers.

ZAC ROGERS: I don't think everyone realizes that it's not that, oh, the system's broken. They're just totally, totally overwhelmed.

SELYUKH: Rogers says warehouses went into the pandemic already pretty busy. Then things started closing - factories, ports but also stores. People cut back on shopping, and so stuff began piling up. And then when everything reopened...

ROGERS: We start to see this rush of inventory coming in. Warehouses are already sort of full, and now they're really, really full. And you can see every month for the last 18 months, there's been less available warehouse space than there was the month before.

SELYUKH: Warehouses are struggling with all the same disruptions you've heard about the supply chain - not enough workers to get stuff in and out faster, not enough railcars and truck drivers to haul things. But above all, there's just an eye-popping, extraordinary amount of goods. Retailers have been importing at record levels month after month.

ROGERS: Essentially, you kind of see this doomsday prepper mentality in all of these companies, where normally they've been as lean as possible.

SELYUKH: Companies are trying to do two things. They're scrambling to bring into the U.S. as much as they can while they can because they've seen what factory and port disruptions can do. But fundamentally, they're trying to keep up with our record surge in shopping. People have unleashed all their cooped-up pandemic anxiety and all the money not spent on traveling and going out on buying stuff - furniture, clothes, computers ordered online, delivered within days. Here's Doug Kiersey.

KIERSEY: We took five years of e-commerce growth and jammed into one year, and we turbocharged a trend, and we weren't really prepared for that.

SELYUKH: Warehousing companies have been building as fast as they can. In fact, it was the one type of commercial construction that boomed all through the pandemic. But setting up fancy buildings, millions of square feet with conveyor belts and robots and all the bells and whistles takes time. Plus, prime warehousing space is tricky and limited. It used to be that logistics real estate went kind of like this.

KIERSEY: Hey, let's go find the next corn field out in the exurbs, go align ourselves with the next interchange on the freeway. And that's where we'll build a big building.

SELYUKH: Now that's too far. Retailers want to get your package to your door in the least amount of time, and that means jockeying for storage and expensive and crowded urban and suburban areas. Warehouse builders were just figuring all that out when the pandemic shopping raised the stakes.

KIERSEY: So demand has come up against a static supply.

SELYUKH: In a matter of a year, warehousing rents in some markets have doubled. Brand-new buildings that would normally sit vacant for months are selling space before they're finished. The other day, Kiersey had to do something unheard of - turn away an old client as three companies vied for the same warehouse.

Alina Selyukh, NPR News. Transcript provided by NPR, Copyright NPR.

Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.