What Retailers Need to Know About Warehouse Space

Choosing warehouse space for lease starts with the network, not the building: how many industrial real estate facilities a retailer needs, where they sit and what each one is for. This guide covers the decisions retailers face when looking for warehouse space: how many facilities to run, whether a higher-rent location pays for itself, how to plan for returns and what lease terms to expect. It draws on Link Logistics research, customer data and executive interviews, along with published retail industry data.

Retail Warehouse Space at a Glance

• Start with the network, not the building. Distribution network design is a distinct decision from building selection: Determine how many facilities are needed and how they should work together, then evaluate specific sites.
• Location can pay for itself. Transportation typically makes up 50% to 80% of total operating expenses for warehouse distribution, according to Link Logistics’ Research & Analytics team, while rent is often 5% to 10% of a tenant’s total operating costs, according to Brandon Page, executive vice president and head of Leasing and Customer Solutions. Page notes that a well-located building can often justify a higher rent once transportation and labor savings are factored in.
• Stores can be part of the network. Some retailers fulfill online orders from stores as well as distribution centers, as Walmart and Target do.
• Faster delivery pushes networks closer to customers. Standard delivery windows have compressed from three to five days to two days and, in some cases, same-day, pushing retailers toward regional distribution and market-hub models, says Glenn Wylie, executive vice president and head of Asset Management at Link Logistics.
• Returns can strain a retailer’s space. Retailers often process returns inside existing distribution centers, which can cause congestion during holiday and peak seasons.
• Retail is one of Link Logistics’ largest customer categories. It is one of the 10 largest customer industries by occupied square footage, at roughly 7% as of 2026, and Walmart, Home Depot and Lowe’s are among Link Logistics’ 10 largest customers.

What Is Retail Warehouse Space?

Retail warehouse space is industrial space used to receive, store and ship merchandise for retailers, whether to stores, to online customers or back to the retailer as returns. A distribution network typically includes several building types: primary distribution centers, which receive bulk inbound freight from manufacturers or ports; regional distribution centers, which serve a particular geographic region; and last-mile delivery hubs, which are smaller infill sites for same-day and next-day delivery. Target, for example, uses flow centers that restock stores more frequently and in smaller shipments. Some high-volume retailers also establish dedicated returns processing centers.

How Does Omnichannel Retail Warehousing Differ From Pure-Play E-Commerce? 

Requirements vary by retailer.

How Many Warehouses or Distribution Centers Does a Retailer Need?

There is no universal answer. Network modeling is the most reliable way to determine the right number and placement, according to Link Logistics’ regional distribution center guide, and every facility added increases the total safety stock required to maintain the same service level.

The guide compares centralized, decentralized and hub-and-spoke models. It lists the decentralized model as best for companies prioritizing same-day or next-day delivery, such as retailers or CPG brands, and notes the trade-off of higher inventory holding costs from duplicated safety stock. A network of four facilities typically requires roughly twice the safety stock of a single-facility network to hit equivalent fill rates, a cost to weigh against the outbound savings each added node produces.

Ranges are planning starting points, not guarantees. See Link Logistics’ warehouse size guide.

Link Logistics research finds that the number of network nodes required increases rapidly as delivery gets faster. Factors that raise the count include a less concentrated customer base, more diversified sourcing, lower average order value and higher service-level requirements. The research compares two hypothetical networks: two nodes (Lehigh Valley and Las Vegas) and six (Northern New Jersey, Atlanta, Chicago, Dallas, Las Vegas and the Bay Area). In that comparison, spreading nodes decreases the distance to end consumers, which lowers last-mile transportation costs and increases delivery speed.

A practical approach to building a network strategy moves through five steps:

1. Define service-level requirements and map customer concentration.
2. Model the network to find the number of nodes that minimizes total delivery cost while meeting service targets.
3. Shortlist two to four candidate markets.
4. Compare total network cost, including labor market conditions and total occupancy and operating costs.
5. Select sites and negotiate lease terms.

Will Higher Rent in a Better Location Pay for Itself?

Being closer to customers can be worth a higher rent. Transportation typically makes up 50% to 80% of total operating expenses for warehouse distribution, according to Link Logistics’ Research & Analytics team, while rent is often 5% to 10% of a warehouse tenant’s total operating costs, according to Brandon Page, executive vice president and head of Leasing and Customer Solutions. Page says well-located warehouse space can often justify a higher rent once transportation and labor savings are factored in. 

A 2024 Link Logistics analysis shows the math. For a hypothetical 100,000-square-foot warehouse in New Jersey’s Meadowlands region, a retailer with eight inventory turns per year would save $6.85 per square foot in trucking costs by moving 85 miles closer, roughly the distance to Pennsylvania’s Lehigh Valley, where the analysis cites a rent difference of about $7 per square foot. These are hypothetical estimates, not forecasts for any specific retailer. 

The comparison uses three inputs: how fast inventory turns, how far a move shortens the distance to customers and the rent difference between locations. The same analysis also finds that last-mile warehouses in infill locations close to population centers are the most cost-effective way to achieve faster delivery times. Approximately 95% of Link Logistics’ warehouse and industrial properties are within an hour’s drive of more than 1 million people, and approximately 87% are within an hour’s drive of more than 2 million.

Can Stores Be Part of a Retailer’s Fulfillment Network?

Yes, for some retailers. On Walmart’s August 2026 earnings call, chief financial officer John David Rainey said stores are the last-mile fulfillment nodes for 80% of Walmart’s e-commerce orders and 100% of its fast deliveries, that 70% of its e-commerce orders are delivered same day or better, and that Walmart U.S. e-commerce sales from store-fulfilled deliveries grew more than 40% in the quarter. Target’s 2025 annual report says its stores fulfill the majority of its digitally originated sales, with two-thirds of digital sales fulfilled through its same-day fulfillment options. 

How Should Retailers Plan for Returns? 

The key decision is whether to integrate returns within an existing facility or allocate dedicated space, according to a 2024 NAIOP Research Foundation report by supply chain researcher Chad Autry. Online purchases are returned more often than purchases across all retail channels, according to the National Retail Federation. The NAIOP report says:

• Retailers often integrate returns into existing logistics operations, using space within their distribution centers, which can lead to congestion and inefficiencies, particularly during holiday or peak seasons.    
• Flexibility in facility design and a location near major consumer hubs are critical for managing high return volumes.    
• Retrofitting existing buildings can be cost-effective if the design allows adaptable layouts for fluctuating return volumes. 
• Returns facilities often need more power than traditional logistics buildings.
• A 30-foot clear height can typically accommodate returns operations, and buildings taller than 36 feet are not cost-effective for most returns occupiers.
• The report estimates approximately 50,000 to 300,000 square feet for high-volume retailers, possibly more or split across facilities, and approximately 10,000 to 50,000 square feet for low-volume and specialty retailers.

Link Logistics’ guide to warehouse space for e-commerce businesses lists flexible layout, labor availability and dock capacity among the specs to prioritize for returns processing, and says returns space can be standalone or integrated into an existing facility.

How Should Retailers Think About Automation When Choosing Warehouse Space?

Scale matters. Page says advanced automation is concentrated among the largest, most well-capitalized retailers, 3PLs and e-commerce companies and remains out of reach for most warehouse users for the foreseeable future, and that a system built for one purpose can lose most of its value if a tenant’s operational needs change. 

At last-mile sites, adoption is lower still: Page estimates that fewer than 5% of facilities have automated sorting technology today, he told Commercial Observer in October 2026. The article notes that the technology is expanding, so tenants should weigh that when evaluating how adaptable a building is.

What Is Link Logistics Seeing From Retail Customers?

As of 2026, retail accounted for roughly 7% of occupied square feet across Link Logistics’ portfolio, making it one of the firm’s 10 largest customer industries. Walmart, Home Depot and Lowe’s are among Link Logistics’ 10 largest customers by occupied square footage.

• Retail distribution tenants: Link Logistics’ Live Oak Logistics Park in The Colony, Texas, a seven-building, 1.1 million-square-foot, Class-A infill development in the Dallas-Fort Worth North Airport market, attracted customers across industries including e-commerce and retail distribution, in spaces ranging from 30,000 to 400,000 square feet.
• Online and long-term planning: Retailers beyond Amazon, including Walmart, continue to benefit from online shopping, and major retailers and logistics companies plan five to 10 years ahead, Link Logistics CEO Luke Petherbridge said in a November 2025 Bloomberg Television appearance.

Where Do Retailers Lease Warehouse Space for Network Nodes?

Major logistics markets each play a different role in a distribution network. Link Logistics owns warehouse space for rent in each of the markets below.

What Lease Terms Should Retailers Expect, and What Does Warehouse Space for Rent Cost?

Warehouse rental rates vary by submarket, building class and configuration, so no single figure applies. Page says face rate is only one part of total warehouse occupancy cost once operating expenses are factored in. A lower rate on a warehouse that doesn’t support day-to-day operations can cost a company more in the long run than a slightly higher rate on a well-located, functional building, he says.

• Terms: Lease terms generally fall into three-, five- or 10-year increments. Three-year terms are more common among smaller businesses, while larger companies and those requiring significant capital improvements more often sign longer terms. Buildings of 1 million square feet or more are typically leased for 10 years or longer.
• Structure: Triple net (NNN) leases are standard in industrial real estate, with tenants paying base rent plus a proportionate share of property taxes, insurance and common area maintenance.
• Flexibility: Renewal options are the most common landlord concession that provides flexibility. Termination rights and fixed expansion rights are harder to negotiate. 
• Common first-lease oversights: Renewal options that aren’t negotiated or clearly defined, unclear capital expenditure responsibilities such as roof and parking lot repairs, and move-in condition that isn’t documented.

For more, see Link Logistics’ guides to warehouse lease agreements and warehouse rental costs, or contact Link Logistics for current availability of warehouse space for lease.

Frequently Asked Questions

What is retail warehouse space?

Industrial space used to receive, store and ship merchandise for retailers, whether to stores, to online customers or back to the retailer as returns.

How is retail warehousing different from e-commerce warehousing?

An e-commerce facility typically handles a higher volume of smaller, individual orders, while a traditional distribution warehouse often ships larger bulk quantities to retail locations. Retailers that sell through both stores and online can serve both customers, and some fulfill online orders from stores.

What types of facilities do retailers use?

A distribution network typically includes primary distribution centers, regional distribution centers and last-mile delivery hubs. Some retailers, such as Target, also use flow centers that restock stores more frequently and in smaller shipments. Some high-volume retailers establish dedicated returns processing centers.

How many warehouses does a retailer need?

There is no universal answer. Network modeling is the most reliable way to determine the right number and placement. A decentralized network is best suited to companies prioritizing same-day or next-day delivery, such as retailers or CPG brands, but every facility added increases the total safety stock required to maintain the same service level.

Why choose infill locations when rent is higher?

Transportation typically makes up 50% to 80% of warehouse distribution operating expenses, according to Link Logistics’ Research & Analytics team, while rent is often 5% to 10% of a tenant’s total operating costs, according to Brandon Page of Link Logistics. A well-located building can often justify a higher rent once transportation and labor savings are factored in, according to Page.

Can retailers use their stores to fulfill online orders?

Some do. Walmart’s chief financial officer said on the company’s August 2026 earnings call that stores are the last-mile fulfillment nodes for 80% of its e-commerce orders. Target’s 2025 annual report says its stores fulfill the majority of its digitally originated sales.

Where should a returns operation be located?

A 2024 NAIOP Research Foundation report says flexibility in facility design and a location near major consumer hubs are critical for retailers managing high return volumes. Returns operations can sit in a dedicated facility or be embedded in an existing distribution center, depending on the firm’s industry and the scale of returns, though embedding can cause congestion during holiday and peak seasons.

How much does warehouse space for rent cost?

Rates vary by submarket, building class and configuration, so there is no single figure. Brandon Page of Link Logistics says face rate is only one part of total occupancy cost once operating expenses are factored in. Contact Link Logistics for current availability and pricing.

How long are leases for retail warehouse space?

Brandon Page of Link Logistics says industrial real estate lease terms generally run three, five or 10 years, with larger companies and those requiring significant capital improvements more often signing longer terms.

Where can retailers find warehouse space for lease?

Link Logistics’ property search lets tenants browse warehouse space for lease by size and region.

Retail Warehouse Space at Link Logistics

Link Logistics owns and operates nearly half a billion square feet of infill warehouse space across approximately 3,000 industrial properties in 40-plus markets and serves thousands of customers. Across its own portfolio, retail is one of the largest customer industries by occupied square footage. Retailers can browse warehouse space for lease or explore build-to-suit development.