“Airbnb for Warehouses” Lets Retailers Find Storage but Also Fill Up Empty Retail

How have supply chain issues and the lack of availability of — or awareness of — warehouse space affected retailers?

Storage is a massive issue for retailers right now because warehouses that should have been empty are full. There are 105 ships off the coast of California right now waiting to be unloaded. There’s nowhere to put the stuff. It just shows how important that storage is for the whole system to work right. The industrial part of that supply chain is enormously important and becoming even more important for retailers. Warehouses, to a large extent, are becoming the retail footprint of companies. [On Chunker, retailers] can now with a lot more freedom plan and say, “All right, maybe we will stock up [on this inventory] because we don’t have to worry about finding space because we know we can find it.” It opens up doors that didn’t exist, and it makes these deals so much easier to do and manage. It just changes the game.

JLL reported that the U.S. will need 1 billion square feet of new industrial space by 2025 to keep up with demand. How do Chunker’s short-term, on-demand warehouse leases fit into the larger picture for retailers?

We did a deal right when the pandemic was in full swing with a big-name retailer that was closing a bunch of their brick-and-mortar stores and moving more online. As part of the overall solution, they needed a warehouse to move all of those goods out of their brick-and-mortar location while they [looked for] some permanent disposition for them. That sort of thing happens a lot, but there are other uses too. Retailers need temporary storage for every reason under the sun. For instance, we’ve got some major retailers right now looking for space to store obsolete inventory on a temporary basis because it’s taking up space in their normal distribution centers, making their lives difficult. They just need to unload them for six months. Along those lines, we just did we did a deal with L Brands. They needed 18,000 square feet to store empty plastic totes for a short time. Another one of our big uses is construction. The big retailers remodel their stores all the time. To do a store remodel, you need a warehouse. We did a deal with Walmart recently, for example. You might think, “Well, Walmart has millions of square feet of warehouses.” That’s true, but they’re not really optimized for store remodeling. They’re optimized for distributing stuff out to their stores. They don’t have space to put in boxes of flooring and fixtures. They need a temporary warehouse for that.

If so little warehouse space is available, how does your team find space?

Seasonality is a big issue, especially with retailers. Sometimes you have the need for a warehouse in your business for just a portion of the year. Say you sell bird feeders. You stock up big warehouses for the spring, but nobody needs [bird feeders] in the wintertime and now all of a sudden, you’ve got 20% or more of your space that’s just vacant, just waiting for another season. Or this also comes up a lot: As a landlord, you might lose a big customer. All of a sudden, their stuff goes away. Your mission is to fill it back up, but that takes time and so it just sits there. If you just look at the numbers in the news, yes, it seems there are lots of warehouses that are chock-full, but there are lots of other ones that are partly empty because of all those conditions.

Chunker also helps landlords with adaptive reuse of retail property, right?

One of the things that Chunker has done is really focus on repurposing retail space to be warehouse space. Take big-box retail. We have a bunch of vacant Sears buildings on our site, for instance. They’re not great warehouses for the long term, but they have high enough ceilings, they all have loading docks and they’re all pretty big. What we provide is a service for these retail brokers to generate cash for their clients from those locations while they’re looking for a long-term retail tenant.

Why wouldn’t brokers market these properties and do these deals the traditional way?

That’s actually how the idea for Chunker came up. One of my friends was a broker at a major brokerage, and all he’d ever done for his whole career is buy, sell and lease warehouses. He and I were chatting one day and we came up with this idea of doing an Airbnb for warehouses. In the traditional world, if you perceive yourself to have a real estate problem, the very first person you call is a real estate broker, but once brokers like my friend hear you’re looking for a three-month lease, they’re like, “I don’t want to pick up the phone.” That’s because brokers don’t make very much money doing a three-month deal compared to a 10-year deal. To a broker and to everybody who’s smart, time is money. Why spend two months working on a deal when you’re going to get a little teeny paycheck? But ultimately, brokers are highly customer service-centric and they want to help people, but they don’t have the tools and so it’s frustrating for all of them.

We don’t do leases or subleases. Our agreements are all space-usage license agreements. It’s like when you buy a ticket to a concert. You think you’re buying a ticket. You’re really not. You’re buying a license to use a seat at that venue for that specific event on a certain day. That’s what you’re doing with Chunker. You’re getting a license to use that space for a very specific purpose for a very specific period of time for a type of thing.

What Chunker presents is a marketplace. Before, [retailers] were constrained by their four walls and whatever time they could spend on what I call “brute-force calling” to try to convince somebody to give them 10,000 or 20,000 square feet for three months. With Chunker, we go find all those spaces for you.

What types of assets are on Chunker and which ones do well?

They’re primarily warehouses of all classes, buildings that are zoned and designed and built to be warehouses. Some might be super old or not in great repair, but as long as the doors close and the roof doesn’t leak, for a temporary use, it’s fine. Because these aren’t retail storefronts — even if they’re the retail shop of the future — customers aren’t coming. You can have a Class D warehouse to store your stuff for three months and not have to worry about it and then move it to your great distribution center down the road. We also have retail space that will suffice also as a warehouse. We’ve got some vacant Walgreens and some other medium- to big-box space on our site. We’ve even got some small little retail spaces. They’re usable, maybe not ideal, but they serve the purpose.