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INVENTORY STORAGE? Proceed with caution.

INVENTORY STORAGE? Proceed with caution.
Since 2017, days of inventory have increased for manufacturing firms nationwide, which means inventory storage has also increased.  Days of Inventory in 2019 hit 59, up from 53 in 2018, and 51 in 2017.  Mathematically, a decrease in the cost of sales could be causing this.  COGS have actually increased slightly from 75.80% of revenue in 2017 to 75.98% in 2019.  This indicates that firms have an increasing amount of inventory.  Assuming this is not an over-production issue, firms are not selling as much as years prior.
This could be interpreted as a sign of economic slowdown, even before the Covid-19 storm made landfall.  The increase in inventory may lead some businesses to think that they need additional space, which they may have a legitimate need for, but if the underlying reason is because of a weaker economic environment, the right course of action for the business to take might not be committing to a new long-term lease.  Companies that absolutely need to move product offsite may want to explore third-party warehousing as an option.  It is not as cost-effective as leasing traditional warehouse space on a per square foot basis, but allows the end-user the flexibility to change on a month-to-month time horizon.
The global health crisis has further complicated the situation.  Some manufacturers now cannot keep enough stock to satisfy their customer’s needs.  This may temporarily reduce the need for additional storage, even though it would be financially feasible.  As with most circumstances, each should be evaluated on a case-by-case basis.
Source: Bizminer.com
Written by: Joseph Schultz, East Team Associate

FOR LEASE – LONE OAK BUSINESS CENTER II


FOR LEASE
LONE OAK BUSINESS CENTER II
1060 Lone Oak Road | Eagan, MN

Property Highlights:

Two (2) office/ warehouse spaces located in Eagan are available For Lease immediately

Option #1: 3,410 SF office + 9,133 SF warehouse = 12,543 SF total
Option #2: 7,605 SF office + 10,256 SF warehouse = 17,861 SF total

Located just off Lone Oak Road and Neil Armstrong Road, with easy access to I-35E, I-494 and Hwy 55
Close proximity to downtown Saint Paul and MSP International Airport
Docks & drive-in doors available

Option #1: four (4) docks; one (1) drive-in door
Option #2: two (2) docks; one (1) drive-in door

16’ clear height

CONTACT:

Phil Simonet | (952) 854-8381 | psimonet@paramountre.com
John Young, CCIM | (952) 854-5067 | jyoung@paramountre.com