Third party logistics (3PLs) play an important role and fill in the gaps in your supply chain. In this episode, you’re going to learn how you can manage 3PLs. Join your host, Elliot Begoun and his guest Jeff Vertun, a real estate advisor at CBRE. Jeff helps executives align their business plans with strategic real estate. Learn all about 3PLs and how you should negotiate with them. Know when it’s the right time you should consider investing in a warehouse and what the landscape in commercial spaces or office spaces looks like post-COVID.

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The Future of Offices and DIY Logistics

I’m going to turn it over to Jeff to introduce himself. We had a couple of conversations. What I found about him was that he was so informative and had a unique take on this. This is a subject that we’ve not spent a whole lot of time on other than maybe having Mike Gammarino on from Bluprint to talk a little bit about working with and identifying 3PLs. We’ve not talked about real estate and how that could figure into your plans, when is the right time to consider your own warehouse, what about office space in this post COVID world, what’s happening out there and all of those things. I thought I would invite Jeff on to open that conversation and for all of us to learn. Jeff, thanks for joining. Why don’t you take a minute to share with the folks who are reading a bit about you and what you do?

Thanks, Elliot. It’s a pleasure to join. Something I liked about you and what you’re up to is we both are ecosystem people. That’s how we got connected in the first place. There are a lot of things that we both can do and specialize in. We both have a lot of ways and connectivity to help companies succeed through an ecosystem approach. I enjoyed that about you. I’m a real estate advisor at CBRE. I help executives align their business plans with strategic real estate and related solutions. It translates often to helping executives think about office workplace, workforce, warehouse, 3PL and strategy around that. Especially when you’re in scaling mode, there are so many different variables and things to be thinking about balance and flexibility.

Being a strategic and challenging adviser in that, and then supporting the executives and other ways from different networking events to partnerships that we create when we understand certain companies are chasing the same business. Within CBRE, it’s the biggest real estate firm in the world. A lot of other resources come up as companies need everything from building facilities, how to build that out to how to think about your network design for 3PLs, to how to think about your labor and labor analytics. It’s a big time for people thinking about more of a distributed labor force to optimize their talent. Those are the different types of things that we do and help companies with.

I want to dive into a bunch of those things. Before I do, just out of curiosity, how did you get into this space? Was this something that you were purpose-driven at first or was this one of those happy career accidents?

I did my undergrad at UC Berkeley. I worked in tech up there because that’s what you do when you’re in the Bay Area. I fell in love with the entrepreneurial spirit. I knew I never wanted to do a corporate job. I fell in love with tech and worked in tech. I also always loved real estate and I was interested in buildings that were getting renovated, getting repurposed and what happens inside them. I have a big belief in companies. I was big in the tech space too. With innovative companies, it’s your culture, talent acquisition and retention. What happens inside of real estate matters so much to people in businesses.

I started getting into some real estate parts right out of college and then immediately found that tech, especially in LA where I was based was booming. There was this big need of companies raising money or needing to scale and having issues across how do I think about office warehouse, the things of that nature and found a career that allows me to marry the two things that I enjoy. It’s a commission business. I’m an entrepreneur in my own right. I’m not an employee of CBRE. I get to align with other entrepreneurs who are busting their butts all day long, being creative and innovative. We get to help them realize how real estate can help propel the business and not just be a cost.

I’m going to take host prerogative before I get to the questions that have been sent. I want to get your perspective on what you’re seeing and what you’re even foretelling around the future of the office. There are two camps. There are folks that are excited and ready. They want to get back to an office environment where they can be social to where they have some distance between work and home, work and kids, spouses and so forth. There are others who are digging this distributed lifestyle being able to look at the balance. By the way, work-life balance is bullshit. It’s just about balance because work is a part of life. Not eager and not wanting to be compelled to get back into the commute and go back to work. What are you seeing? What are you hearing from clients? Are people reimagining the spaces that they’re in? Are they shrinking them? Give us an overview of what the future of the office space looks like, especially for entrepreneurial companies.

As you can imagine, it’s a conversation I have a lot. Based on conversations I had with all the executives, VCs and types of people that I work with, also leveraging CBRE with a massive scale, we have a lot of data globally on this. The answer is that it is a range but there are indicators that companies can follow on what other companies are doing. There is the vast majority of executives when polled and when asked will say that there’s very clearly an advantage to being in an office in some scenarios. There’s some collaboration. There is some speed. There are certain marketing and sales being next to each other, knowing the feedback loop. There are elements of that that you can’t replicate at home. At the same time, there’s a realization that there’s a lot about remote working that’s good.

For a lot of new candidates who are looking for jobs, especially the intelligent ones, it’s a requirement. A lot of them are asking and saying, “I want to have maybe some hybrid.” There’s a bit of a push and pull across the board. You have companies like Apple and Google that if you haven’t seen have said that working from the office is mandatory starting later in 2021. There’s not even remote working optionality at some of the big companies. You see some companies talk about, “We’re going to follow what they’re doing.” I also do have companies that are like, “We’re working fine. I like not spending the money on it. We’re a team of small people. We get together when we need to at someone’s backyard,” and that’s totally fine.

It’s a conversation and it’s unique to the company but you are seeing a lot of companies start to plan September, October timing new offices. The companies that are probably doing the most of it are companies that are hiring. Hiring has been proven to be very hard to do remotely, to get them up to speed. There’s a lot of value seen in that. The conversation can also go to what’s possible. Luckily, the office market surprisingly got crushed in 2020. There are incredible deals. There’s incredible flexibility. There are a lot of different types of space from your own office to shared services where you can take a small space for ten days of the month, pay that portion, use some shared services. It’s a long way of answering but it’s a range. There’s a lot of momentum coming back. One thing is there’s no rule. It’s a great opportunity for companies to do what they feel is best for their business and what they’re being told by their teams.

What do you mean by no rule? Talk to me about space specifically. Have you seen any change in how that’s been set? We started to talk a little bit about our office is going to be impermanent or flexible. In other words, there might still be an office that you go to. That may not be just your office alone. It may be your office on Tuesdays, Thursdays and Sarah’s office on Mondays, Wednesdays. What are you seeing about the space plan? I’m curious about what’s going on.

It depends on the company. There are companies that say, “We polled. We’ve looked. We’ve seen what people’s travel plan. We’re going to have executives in the office 2 to 3 days a week.” Space planning then takes this data into account. It should be a very thoughtful approach. It’s not like just go, find an apartment or a whole one on Redfin and pick a place. It should be very thoughtful because there are so many different variables that go in. There are a lot of opportunities to take less space. There are a lot of requests for outdoor space. A lot of companies are finding that you don’t need to be on a high rise. You can find something more creative, something ground floor or something that’s your own. The spaces themselves depend on the company, but we’re seeing that it’s going to be less like an open-plan like what Google made famous.

For the majority of tech companies or eComm companies, a hybrid approach is what we’re seeing most of. You got to come in three days a week. If you don’t want to come in 1 or 2 days, do your heads-down to work on those days. If you’re going to do heads-down work with your headphones on, that you can do just as well at home while taking care of your home life and not commuting, then you can be as efficient that way. When you’re in the office, think about it as activity-based working. There are more meeting spaces. Some companies have a lot of four-person meetings. We’re setting up spaces that have a lot of four-person meeting areas, whether it’s couch seating or private spaces. The thinking is around your actual activity-based working and what that should look like in person. That’s depending on the company but you look at, when we’re together, what’s important about that and what makes us most effective? We designed the space to that. It’s becoming a less open sea of people.

One of the questions coming in is specific to co-working spaces, the WeWorks of the world and so forth. What are you seeing? What are you hearing there?

Everything is 50% off. They’ll tell you that mid-tour. They got crushed like everybody else. They got crushed worse because if you think about a typical office landlord that has a five-year lease with a tenant, if that tenant’s lease didn’t expire in 2020, most of them have to pay rent. A lot of tenants think the landlords in the world are screwed and some of them are a little bit, but most of them still have leases that are valid that are legally binding. It’s not like they didn’t get paid in 2020. Because the co-working is so flexible, they got crushed. It is a good opportunity to get a good deal with them. Most of them these days are not trying to push their co-working model, which is sitting out at an open desk. You get a membership, you pay a membership and you can show up and sit, and there’s nothing dedicated.

A lot of them are good. You have your own private office within their space. Even if you’re a smaller team, you can still go. You have your own private space that can be branded and be your own thing but not feels like you have a shoebox of a space. You have access to all the stuff that they offer from all the amenities to outdoor spaces, to event spaces. We’re seeing those starts to fill up a little bit and get more demand first. You can go in. You don’t have to pay anything to set up. There’s no furniture. There’s no IT and none of that. It’s short-term and you’re like, “I don’t know how it’s going to work.”

It’s a good first move into it. There are a lot of versions of the WeWorks of the world. There are small boutique versions. There are larger versions. They’re all over town and they’re all generally hurting. It’s not as simple as Googling and calling WeWork. There are a lot of different options that someone like myself can help vet and negotiate good deals. It was unheard of pre-COVID but a VC client of mine wanted to be in the office ten days out of the month. We were able to get a contract to pay ten days of the month’s rent. It’s a good deal.

Putting on your Swami’s hat, your clairvoyant hat, what do you think is going to happen in terms of commercial space around offices? Is it going to rebound? Is it going to stay soft for a while? In the innovators market where landlords and tenants begin to discuss the realities of the new work environment and flex, talking about that kind of co-working spaces but I even see the potential for shared office spaces. Two or three companies go in and each of us is going to take ten days a month and things like that. What are you seeing? What are you hearing? What are some of the ideas that you’ve had?

There are going to be deals to be had for a while. I work globally. I work effectively, nationally with our team as well. In LA, which is my hometown. We have more sublease space on the market than ever before. Why does that matter? These are spaces that companies have moved out of. They dropped and don’t want to pay this rent. They’re trying to get out of their lease and figure something else out. Those are the spaces that are getting attacked first. If you think about it, if you’re a company looking for space and there are options where it’s built out for a good company like yours, you can move in and not deal with any construction, time and costs, you take a built-out second-generation space first. The spaces that are going to get hurt, the landlord and the office market that gets hurt for a longer period of time is the space that’s first-generation and that’s not built out yet. It takes a very small sliver of the tenant market that wants to do a ten-year lease, put several million dollars into space and build it out.

You’ll always have the Apples and the Amazons of the world. I have a big movie studio company that’s doing a big ten-year lease because they need to make a bunch of content. They need a studio. There are certain companies that it makes sense for but the office market will be depressed for a bit. There is a big surge starting to come back. My gut is that the world is starting to come back. At least the US is coming back. You’re seeing the big companies making it mandatory to be back. Unless there’s some big problem which could always happen as we know, most companies are going to follow in line on that. I do think in the next few years most companies will be operating very similar to how they were before.

Maybe a little bit more of a distributed labor model where we do see a lot of that, where there’s a lot of companies that are like, “I need to hire a bunch of engineers.” It’s hard to hire an LA. They work with our labor analytics team to think about what’s the availability of engineering talent across Austin, Ohio, Florida or whatever else we want to look at. You can think about ways to maybe have a little hub and spoke model where you maybe have your HQ somewhere. You can get even cheaper labor and cheaper real estate in a different market. People are a little more flexible on that as well.

I’m seeing that people are changing where they live instead of it being dictated by where they work, by where they want to live and the lifestyle they want. There are some changes. There are going to be some counter-pressures that people are going to have to work through. Companies are going to have to navigate. It’s going to impact what the future workplace looks like and what the future innovative companies work. If you want to attract the talent, being flexible, being open to it and aware of the fact that that’s going to be a big part of the benefits package going forward in terms of that flexibility and that self-determination that a lot of people are coming out of this.

It’s important who you’re hiring too. There’s a very big difference between a 40-year-old employee or a young employee too. It means different things. From young employees, they love the office perks. Getting lunch or getting a free coffee means a lot to these employees. I keep hearing that. They like having some flexibility to work from their sweatpants. They do lean a little towards remote. They live in small apartments. It’s not so great to work remotely if you’re a young out-of-college kid. There are a lot of nice perks, socializing, learning and growing that matters to a younger demographic. With the middle-aged, it depends. Some people are like, “Get me out of this house with my middle school-aged kids. I can’t take it anymore. Get me in.” Some people are like, “This is awesome. It’s the best.” That’s why I would be conscious of who you’re trying to attract and being thoughtful about that.

It’s building in flexibility around that. That person with middle school-aged kids, there will be times where it might be convenient for them to work at home but there may be times that’s like, “If I don’t get out of here, I’m going to strangle one of the kids.” It’s the same with the young worker. It’s great when you’re living close but sometimes you want to be gone somewhere else. Building into your thought process that awareness and also not just accepting that we can work distributed without that activity. We at TIG have a distributed workforce. We missed being together and seeing each other. We’re trying to figure how we do that in a better way. I want to switch topics to get to the less theoretical and more concrete topic of what’s impacting a lot of the brands.

When the pandemic was at its apex, there was a massive shift as everybody’s aware towards D2C. A ton of brands had to pivot their efforts, optimize and enable their ability to be a D2C brand. Although brick-and-mortar is coming back and brick-and-mortar will always be a big part of the sales outlet, D2C remains important. During all of that, however, since this sector wasn’t the only one with huge upswings in eCommerce, the reality is that for an emerging brand, being important to a 3PL is hard. You’re not going to have the throughput, the pieces, the pallet positions and so forth to matter. What we’ve witnessed is a lot of these companies who had huge growth compared to their baseline, in D2C but comparative to products and brands that have much bigger tonnage move, much bigger amount of pallets, they’ve been squeezed out of a lot of 3PLs. They are either squeezed out because pricing has gone up or to the fact that 3PLs are struggling to keep up with volume to find employees or aren’t executing well.

I’ve seen a real swing and awakening to the fact of, “Should we be doing this on our own? Should we be considering getting our own warehouse space or something along those lines and doing it ourselves?” The other thing I’ll add before I turn it over to you to give some insight on is that unboxing experience for a brand and that personalization. When you take that in-house and do it yourself, it gives you a lot more flexibility in creating that surprise and delight moment on the other end. What are you seeing? What are you hearing? Begin by sharing at a high level the trends and then also the upside potentials and the pitfall potentials of deciding to move away from a 3PL and doing this all by yourself.

There are a lot of good questions in there. This is where in 2020 we spent most of our time in eComm logistics. There’s a lot to unpack there. It’s got to be an individual business decision. Everything you said is right. The smaller businesses are having a harder time with 3PLs. Not just them but they’re raising rates and telling people, “Screw you. You’re paying this or I’m not even going to let you offer to pay this because we don’t have the capacity.” You’re seeing a lot of interesting innovation in the carrier space, which we can talk about as well. I have some good new solutions and technologies that are helping people do different things and use the regional carriers that are popping up. We can talk more about that in a little bit. We’ve helped a lot of companies in the early stage trying to figure out the right 3PL. There are different ways to attack it.

You need a team around you to help support you in defining what exactly you want to be asking for, how you should be measuring and ranking these 3PLs. You need a team to help you understand. One of the biggest things around this is you need to sell your story to the 3PL. It’s a funny thing because you’re like, “I’m giving you business. What am I selling to you for?” It’s a little bit the business. You need to gain clarity. I’m big on gaining clarity on our options and then letting that data drive our decisions. You try and figure out if 3PL makes sense. A lot of times you won’t get it.

There are ways that we have done that when people do it on their own 3PLs, they don’t want to talk to them. When you can approach it from more of a volume or when you work with advisors that have relationships with these 3PLs. The 3PL sees it as helping myself or certain other advisors that send them a lot of business or collaborate with them on other items, they can see it as a bigger volume item. If you’re struggling at the beginning of the 3PL selection thought process or beginning a team that’s used to it, I’ve seen it make an impact and get you in that door.

I agree with you the personalization, especially when you’re on a smaller scale. It’s going to be hard. Not most builders are going to have a hard time margining that. If we’re finding that it’s cost prohibited or an issue, you have to also run the scenario of, what does it cost to do it ourselves? What does it cost to do our own warehouse? What does that need? In general, it’s a bit of a business call because most executives of these types of companies are not warehouse operators. You got to be a good warehouse operator and manage labor. You can hire somebody to do it but it’s taking you a bit of your focus away from what your core competency is.

At the same time, especially in the early stage, control can matter a lot. If you have some more specifications or things that you want to keep your eyes on or you need your customer service team to see, I’ve seen it make sense to have your own warehouse in the early days. Get more data on what exactly you’re headed towards. It’s not a perfect answer. There are ways that you can add data and clarity to what both scenarios can look like but it is very challenging out there in both of those spaces. It should be a team effort.

Let’s talk about if you decide self-directed is the right way. How would you evaluate and start that process? If I’m a young brand, I’m not going to be particularly sexy to a landlord in terms of my business stage, my creditworthiness, all of those kinds of things. How do you package that up? What do you have to be realistic about as an entrepreneur about what space you can get and what you’re going to have to commit to getting it?

It’s something where we tell the right story. We signed a perfectly reasonable lease with one of the other companies that we’ve connected us with Elliott. In this stage, it’s very doable and it happens all the time. Make the assumption that we’re going to be able to figure it out. We’re going to be able to find the right match. I wouldn’t be worried that you’re not credit-worthy enough or something like that. If you want to think that when you were defining and getting clarity on what doing it yourself looks like, there’s a whole bunch of questions to ask before we look at real estate. That’s part of the challenging aspect that we try and bring.

You have to look at your numbers. You have to look at where you should be and why. Think about if you’re West Coast and East Coast-dominated, which a lot of companies are, you have to look at the data and look at carrier transportation numbers. We help you think about do you set up one warehouse or does it even makes sense if you’re going to do one, plan on a second one on the East Coast so that you can cut down your transportation costs. A lot of times that does make sense. It can save you a lot of money. You use a regional carrier.

Before I even talk about which spaces to think about, the first is to look at what we call your network design and how to be thoughtful about that. We use a data-driven technology resource that layers in not just transportation but what is your labor cost? What does the availability look like? What is your competition for labor? That’s a big line item if you’re going to open a facility. With the real estate costs, are there any government incentives that we could take advantage of? For example, the Southeast is a hotbed of government tax incentives where you can make millions of dollars. Not at this scale but where you can make money from the government for bringing jobs and spending on capital there. Not one or multiple variables that matter but transportation tends to be the biggest cost that you look at first.

It’s then about designing what kind of warehouse we need. There are resources and teams that do this. Executives should not feel that this is on them. There are teams that do this and help you with this as we should. Help you think about, do you rack? Do you not? What does your throughput look like? How do you lay this thing out? What dock equipment do we need, if anything, based on the trucks we’re using and how do we optimize that? It’s not as simple as getting a warehouse and putting stuff in it. There are a lot of ways to gain a lot of efficiencies. That’s what companies do. That’s what the big guys do. There’s no reason that even if you’re in the growth stage, you shouldn’t start to practice these items to make a big impact on your company now and down the road.

There’s a cool question. It’s a good idea if it doesn’t exist that we might want to end this show quickly and go start, Jeff. We talked about co-working spaces. Have you seen any co-warehouse spacing where brands are renting a space with similar needs, sharing the space and jointly staffing the facility?

You’re not seeing two companies as often like, “Let’s share and sign a lease together.” There’s a company called Cubework. They’re like WeWork for warehouse. They chop up a warehouse into small little sections. They charge you an arm and a leg for it so you got to compare it reasonably. A lot of times it doesn’t pencil but there are companies doing that. It tends to get messy because you have product and labor crossing and sharing that. If there are a few companies that want to go in together for some economies of scale reason, we just put a fence down in the middle of the space and demise it, that’s fine. The hard part about that business, Elliot, that I’d love to start with you is it’s hard to pencil that business from the operator side. It makes it harder for the tenant side.

In terms of what a founder, an entrepreneur should do to begin this evaluation process and how to engage in the process, one of which is to align with a professional like yourself. In general, what are some of the questions that they should be asking themselves or their organization to determine, “Are we ready for this? Is this something that we should even consider as we struggle?” Many brands are struggling with their 3PLs. It’s not the fault of the 3PLs. The 3PLs are still in triaged mode. Many of them are still recovering from 400X what their normal business models were, trying to rethink it and also struggling to find employees. If you’re taking a hard look at this because you want to out-execute your competition, I doubt very much that it’s going to be for cost-savings. It’s more going to be for customer experience and for differentiation. How do you start that assessment process? What would you recommend as a laundry list of questions to run through to identify where you are in terms of readiness?

You’ve got to start with your baseline. You have to understand how are we doing this, what’s working about it and what’s not working about it. It’s something that we’ve talked about. I’m a big fan of the “nothing is sacred” methodology where just because we’re doing it and it works this way, let’s assume we could start over. It’s like, “What would you do?” It’s about saying, “This is what we’re doing. This is what’s working. This is what’s not working. This is a problem coming up or outgrowing the space. We are not raising funding. This is getting a new account. We’re going to be out of space in this.” It’s starting to define where you’re at. You have to start there. Is there something that we need to do? If not, what would be the next horizon that would come? How do we back into it when we start thinking about that? I would start there.

If you’re like, “We’re outgrowing the space. We got to figure this out,” it’s a challenging data-driven approach. It’s how you got to think about it. We do a lot of digging into what does your next 6, 12 months look like? How can we put a range around what that is since I know it’s hard to predict in the early stages? With the problems we have now, do we want to solve that? If we solved it, it would be like this. Is that worth doing or not? We have this great comparison analysis that models different scenarios for you. It’s not rocket science.

It’s being thoughtful about what’s working, what’s not, where you’re headed and having help in using data to define what the actual impact of different things is going to be on your business. It’s not just, “We’re outgrowing our space. We need more space.” There’s so much that goes into like, “What about that is going to help us? We need more space.” If we get something, can we rack high? Should we get something small but got a high clear height to reduce costs and reduce labor need? That’s something to think about. “No, it doesn’t work like that.” “What else can we do? What would that look like?” That’s how I would approach it.

The other thing I would say too is that for every problem at your 3PL, accept the fact that you’re going to have the same problem. If they’re struggling with hiring good warehouse workers, you’re going to struggle to hire good warehouse workers.

I represent several 3PLs nationally and helped them figure out what to do and how to do it. They’re all so at overcapacity. All of them is a big statement but for the majority that I talked to, what they’re dealing with is too many inbound calls, not enough space to put them in. They’re balancing, “Do I get another warehouse to fill this or not? I’m struggling to find labor. I’m losing labor to Amazon because they’re paying more.” This is what they’re dealing with. It’s not finding clients. It’s the facts of why the earlier stage guys are getting screwed around by the 3PLs. It’s not even on the radar. I was on a call with the CEO of a national 3PL. He has no problem finding clients getting enough business. It’s about running them, labor and balancing the existing clients that want to expand with him that are Fortune 500 companies. That’s what a lot of these guys are dealing with on a day-to-day basis.

The way these business development guys at 3PL work is they work a lot on referrals. They work on partnerships when they’re pitching business. There’s a bunch of companies all pitching the same business. They’re fighting each other over it. Relationships in and relationships to them matter a lot. When they’ve seen guys like me and my network send them more opportunities, it allows them to be a little bit more flexible. If you do want to push the 3PL, I would get some team and consultant. Mike Gammarino is a friend of mine. He’s great at that as well in helping to balance that. Go in with a team to give you the volume competitive advantage to get the data on how good you can do and is that what your business wants or not.

I like doing this because I’m that person but I love a good car crash. What are some epic fails that you’ve seen as brands have tried to either move to a 3PL or from a 3PL to doing it themselves?

One of the biggest things I see is time. These are big decisions. These take a while to get ramped up and to hire. No matter which route you’re going, you have to give it the time it needs to be optimal and to be fully vetted. There are CEOs that are doing one million things. This is one other thing on their list. It’s generally not the exciting thing. A warehouse is generally not the thing that gets them up every morning to work on but this matters a lot. You work with eCommerce companies. To do your own warehouse takes time and thoughtfulness, especially to be optimal from a cost and a functionality perspective.

The biggest car crash we see is a fire. You see people allowing it to become a fire and there are suboptimal choices and decisions that get made. Sometimes you can’t avoid it and you deal with it. It’s why we take the approach of being very strategic advisors and not just real estate brokers that send you a list of properties. It’s not about just finding properties and negotiating real estate deals. We stay involved with companies throughout their life cycle two years after you’ve signed your lead or whatever because we want to stay involved. You need to have somebody keeping an eye on how soon and advance needs to do something, what your issues are and start vetting your options. It’s not a complicated one but it’s all solvable. It’s a matter of giving yourself time. This is a big and important thing for companies to get right. Don’t save it until the last second as something to do.

You mentioned at the onset of this conversation that one of the things that you do as an organization with CBRE as well is you’re tracking data. You’re tracking staffing trends and things along those lines. Share with us some of the things that you’re seeing that might be of interest to those reading.

It’s a great function that our company has. A lot of companies are using it. To think about for office and for warehouse, there are a lot of things that the new data can glean on and what opportunities to look at? We’re looking at things for the office. Where are people moving? Where are engineers flooding to? Where are they not? You can understand that. We’re seeing that warehouse labor is getting harder and harder to find, especially in the major metros. It’s getting more and more expensive. You’re also seeing it harder to find because there’s a lot of those employees that are doing as well, close to as well or better on government benefits that are out there. I know many people are doing that as well as they were but they don’t have to work. Those are very real fact of the world. It’s very challenging in the warehouse space. The best thing you can do if you’re going to run your warehouse, have a good operator that can help you keep tabs on that and handle that for you. In the office space, jobs are good. There were people that have moved. The warehouse is hard. The office is getting a little more dispersed.

One of the things I would say to everyone reading is two things. You’ve talked about network design. Think about network design if you’re going to self-operate a warehouse broadly. The optimal thing to do, for everyone reading, is you want to move as much of your freight when it’s the densest. If you’re going to be shipping throughout the US, you want to have one warehouse and you’re going to be doing less than truckload moving, where can you locate a warehouse that you can move your freight where it’s the densest? The other thing is to think about, “Why do I need to be in one of these major markets?” Maybe it’s compelling to be there or maybe it’s because it’s close to home. Being open to thinking about what about being in Nebraska? What about being in other states that have lower cost of living, lower wages, more available employees and a bigger employment pool? All of those things should be in consideration.

We talk about this all the time on this show. Everything in this business, I don’t care what the decision is as a tradeoff. There is a yin to every yang. Your job as entrepreneurs and as founders of businesses is to assess those tradeoffs and try to make the best tradeoffs in totality. All the things that you trade up for and give up on the other end, tip the scale in your favor versus the other brands that are also vying for the share of the marketplace. I think we’ve killed enough time. This has been a different take. It’s important as people begin to think about it. Jeff, I’m sure there are a bunch of people reading this who want to reach out and begin the exploratory work. How do they get ahold of you? What resources can you put them towards?

I’m happy to have introductory conversations with no expectations. We’re in our ecosystem people. I’m here to help. You can email me. I’m happy to be a resource and chat without any expectations.

Thanks so much for joining. I’m looking forward to having many more conversations. Please, reach out to Jeff. You want to go to the well before you need the water on all things. You may not be contemplating what you want to do in terms of a self-operated warehouse. We didn’t talk about manufacturing. The same thing applies here to co-man versus self-manufacturing. It’s the same kind of decision, same kind of challenges, when’s the right time. I would encourage everyone reading to spend a little bit of time with Jeff and understand what the optionality is. Begin to think about that strategically, whether that’s six months or five years from now. Having that on your horizon and having that alternative there gives you some freedom and some confidence, whether it’s an office, a warehouse or a manufacturing piece that we didn’t talk about. With that, I thank everyone for joining this episode. I look forward to having you all back soon. Jeff, thanks again. I appreciate you being here. Everyone, take care.

Important Links

• Mike Gammarino – previous episode

• CBRE

About Jeff Vertun

Specializes in advising e-commerce, technology, logistics, media, and professional service companies to position their real estate needs as a vehicle for further growth across the world. Works closely with executives to analyze their workplace and warehouse network logistics requirements, have challenging strategic conversations, bring clarity to our opportunities through data-driven and technology resources, and then execute thoroughly.

Each client is treated like a long-term relationship and he prides himself on hustle, communication, and collaboration.

His team is continually involved with entrepreneurial programs and their network of relationships within the community is particularly robust. He is passionate about the success of his clients and goes out of the way to make introductions and intimate gatherings that will help his clients thrive.

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