Making the decision to do a warehouse expansion or move is tricky. Most of us don’t notice we’ve outgrown something until the evidence is undeniable. Like when your stretchy jeans stop stretching—and now they’re just jeans. Or when you punch a new hole in your belt that’s so close to the end, it won’t even stay in the loop. Technically, it works, but you know it’s temporary.
Warehouses are the same way.
At first, the signs are subtle. A little congestion in the receiving area. Maybe a pick path that used to flow but now feels like Frogger. Then, one day, you realize you’ve outgrown the space—and you ask yourself: Does this warehouse make me look fat?
Figure 1. “The Frogger” episode of Seinfeld (Season 9, Episode 18), originally aired April 23, 1998. Source: IMDb.
So, how do you know when it’s time to expand versus just tightening your belt (again)? And how do you weigh your options in a way that’s strategic, not reactive?
Let’s walk through the decision sequence and help you figure out whether it’s time to stretch, shift, or start over.
Is Your Warehouse Holding You Back? Turn to Your KPIs.
Before you can plan a move, you need to know exactly where you stand. That’s why it starts with observing current warehouse performance indicators. Why? These indicators provide a reality check. They allow you to draw a clear line from how things are operating now to where your business needs to go.
If your company has a growth goal that requires doubling throughput, ask: can our current systems, space, and staffing model support that? Or are we already seeing symptoms of strain—like poor inventory accuracy, bottlenecks in staging, or backlogged receiving?
It’s not just quality and production. Look at your safety figures and turnover. If the product is stored in any open nook just to make it fit, it’s not just inefficient, it’s unsafe. Items get lost, damaged, or forgotten. People get hurt. Good employees leave.
One other key figure to check is current storage utilization. Every site and technology stack has its own “breaking point,” but a good rule of thumb of storage saturation is 85%. If your storage is consistently at 90, 95% full, chances are that your operations are suffering because they don’t have enough transitional space to operate or locations to find.
Every workaround eventually breaks. The numbers will show you where. But more importantly, they help you ask: are we building a warehouse operation fully capable of supporting current and future organizational vision and goals?
Looking Ahead So You Don’t Fall Behind: Forecasting to Stay One Step Ahead of Growth
Forecasting requires you to zoom out and map your operation to the future your business is aiming for. The question isn’t just “Can we survive Q4?”—it’s “Can we scale profitably for the next three years?” Growth without the infrastructure to support it often leads to decline.
If leadership has set goals to double revenue or expand into new markets, what does that mean for your operation? More SKUs, more orders, more complexity. Can your warehouse layout, equipment, systems, and staffing model keep up?
Ask yourself: what’s likely to continue working for now, what’s on track to improve, and what’s already showing signs of strain?
- Continue – Your current setup has the flexibility to absorb growth for a while. But how long will it hold? Can your team continue to hit targets through next year’s peak season? Or are the seams already showing?
- Improve – Maybe you’ve started refining your slotting strategy, investing in light automation, or restructuring shift schedules. These efforts may improve throughput or reduce errors in the near term. But what’s the ceiling? And how much volume can these gains realistically absorb?
- Worsen – Certain issues may already be creeping in: staging congestion, longer dock turn times, or storage inefficiencies. Even with good people and processes, a facility under constant pressure can find itself spending more time fighting fires and correcting costly mistakes than executing strategy.
Outgrowing your warehouse doesn’t happen overnight. But if you’re not looking ahead, the breakpoint sneaks up fast.
Choose Your Warehouse Adventure: Exploring Your Options
Before you start pricing out new buildings, step back and explore your alternatives. Each path has cost, risk, and timeline implications. And the wrong one can set you back years.
Here’s how the main options stack up:
Do Nothing
Sometimes, standing still makes sense. Economic uncertainty, high interest rates, or leadership transitions can make it difficult to justify a significant move.
However, even when it’s the right call, doing nothing comes with trade-offs. Labor costs continue to rise. According to recent research from Workday, “higher pay was the top incentive used for hiring and retention,” a finding that has held steady for the third consecutive year. External forces, such as wage pressure, tend to exacerbate the challenges of operating in an ill-fitting warehouse.
Being out of space at your warehouse won’t fix itself. Operational workarounds, while manageable in the short term, tend to erode performance over time.
Warehouse Expansion and Improvement In Place
Useful if you’re underutilizing your layout, vertical space, or tech. But there’s a ceiling—literally. That said, some companies are finding new ways to push that ceiling higher to increase warehouse storage utilization.
Rueben Scriven of Interact Analysis predicts many companies will pause construction but continue investing in their existing assets. “Many companies are expected to continue to spend on automation, focusing instead on their existing assets, rather than investing in new or larger automation projects.” That might buy time, but it doesn’t stop the clock. Delay too long, and you risk falling behind as competitors retool for the next wave of demand.
As Ryan Boucher of Wize Solutions shared on The New Warehouse Podcast, one customer transformed a one-million-square-foot facility without breaking ground. “They’re taking… call it a million square foot facility… and their solution is giving that building the same or more storage capacity in one-third of the building that they were getting over the whole building,” he explained.
With high-density systems like shuttles and AS/RS, the client essentially tripled their capacity within the same four walls. “They’re basically getting like three new warehouses in one existing warehouse.” And they did it while operations continued in the other sections of the building.
An AS/RS is a heavy lift and a significant investment, but for the right operation, it’s a game-changing way to scale without relocating.
Move to a Brownfield Site
Repurposing an existing building can be a smart move. In many cases, brownfield sites provide a faster and more cost-effective path to scaling. But not all buildings are created equal.
Older facilities can come with surprises: outdated infrastructure, limited heights, inefficient layouts, or unknown permitting requirements. Before moving forward, ask the right questions:
- Does the building lend itself to future automation?
- Does the building support conveyance?
- Are docks, HVAC, lighting, and floor flatness aligned with modern standards?
- Is this a solution or another project?
If you find a good fit, brownfield can absolutely deliver. In some markets, it’s the more strategic choice, especially when construction pipelines are tightening and build times are stretching.
But when the existing options don’t support your long-term goals, that’s when it’s time to consider greenfield.
Move to a Greenfield Site
Sometimes, the best option is to start fresh. A greenfield site enables you to do just that without having to work around existing constraints. That can be especially valuable when your operational model has changed—or expects to change significantly in the years ahead.
It’s not the right path for every business. Greenfield comes with higher upfront costs and longer timelines. Deloitte estimates it can take anywhere from three to five years to bring a greenfield site online. However, for organizations with complex growth needs and a long-term horizon, a greenfield warehouse offers the flexibility and infrastructure that’s hard to find elsewhere.
If your business is anticipating major shifts in order profiles, throughput, or labor models, designing a purpose-built facility can help future-proof the operation. You can optimize for flow, maximize space from the start, and avoid the compromises that often come with retrofitting.
Outsource Some or All
Outsourcing warehouse operations to a 3PL or micro-fulfillment partner can be an attractive option, especially when space is tight and growth is uncertain. It offers flexibility and speed, with access to infrastructure, labor, and technology that might otherwise take years to build in-house.
This isn’t just a space decision; it’s a strategic one.
Many 3PLs differentiate themselves by investing in automation, advanced WMS platforms, and value-added services like kitting, returns processing, or same-day fulfillment. If those services align with your goals but not your capabilities, outsourcing can accelerate your timeline and free up internal resources.
Still, outsourcing warehouse operations comes with trade-offs. Handing off a critical part of your supply chain means less control over labor, operations, and customer experience. It can also be challenging to bring warehouse operations back in-house. There are employee considerations such as morale, retention, and organizational identity.
Outsourcing can be a bridge or a destination. But either way, it changes how your warehouse fits into the broader business model.
Build the Case Before You Break Ground: Crunching the Numbers and Aligning the Team
Now, it’s time to put numbers into the narratives. Look at cost-per-square-foot, ROI timelines, disruption impact, and capacity gains. Layer in labor availability, local tax implications, and tech investment. This is where ops, finance, and leadership need to align.
Equally important? Assigning the right project owner. Ideally, it’s someone with strong leadership at the project level and experience in warehouse operations.
Warehouse projects are operational puzzles. From racking and automation sequencing to inbound scheduling, picking strategies, and change management, success hinges on a thorough understanding of how the warehouse operates on a day-to-day basis.
Someone with strong leadership and warehouse experience knows how to ask the right questions early, anticipate operational friction, and communicate across functions. They’ll keep timelines on track, coordinate with vendors and internal teams, and ensure operational realities are part of every design and budget conversation.
The earlier you bring that person in, the smoother your path forward will be.
Warehouse Moves: Should I Stay or Should I Go
Warehouse moves are never just about space. They’re about aligning your physical footprint with your operational future.
Whether you decide to stay, densify, repurpose, rebuild, or outsource, the most important thing is clarity. What are you solving for? What will it take to support the business not just this year but three years from now? And what trade-offs are you willing to make?
The best decisions start with honest conversations, clean data, and a clear vision of what the operation needs to enable.
PL Programs specializes in warehouse strategy, operational readiness, and implementation support, whether you’re optimizing your current space or planning for the future. Contact us today to start the conversation.