Whether you need a warehouse expansion is a question of both current site processes and business-level management.
At the end of Raiders of the Lost Ark, the camera pans as the Ark slowly rolls across an endless warehouse known as Hangar 51, with mysterious inventory stacked to the ceiling. But in the real world, warehouses have limits. And when you’ve outgrown yours, the cost of standing still can be far greater than the cost of moving. But you need to know whether the root cause is site operations or deeper business activities.
Delaying a warehouse move is costly, both financially and operationally. Sure, your warehouse operations should be able to flex through the ebbs and flows of seasonal variability. However, if flexed too long, over time, workarounds become ingrained in the process and capability runs out. These mask deeper issues, and, just like the elastic on our favorite socks, the flexibility eventually runs out.
In this article, we’ll look at what’s really driving space constraints, why a move won’t fix misalignment or inefficiency, and how to know if you’re truly ready to expand.
Are You Really Saving Money… Or Just Deferring the Pain?
On paper, operating with less warehouse space might seem like a cost-saving decision. But under the surface, the real price starts adding up. Reactive fixes lead to unplanned downtime. Temporary solutions become permanent bottlenecks. And every day spent in a suboptimal space means missed opportunities for growth and efficiency gains.
Unfortunately, if you haven’t done the hard work of optimizing your current space, a move won’t solve the problem. Just like Hanger 51, obsolete inventory, dead stock, and forgotten materials don’t just take up valuable warehouse space; they quietly eat into your performance. Without addressing these underlying issues, a bigger warehouse only magnifies the waste.
If what you really need is a warehouse improvement project, not a relocation, take a detour and explore 10 Questions Every VP Should Ask Before Starting Warehouse Improvement Projects.
If your current warehouse is already running lean with an optimized layout, consider whether a larger space or an automation project is what you need. Think about what that space makes possible: expanded capabilities, increased throughput, room to scale, and the breathing room your team needs to execute at a higher level. Your gut might be telling you that you’ve outgrown your space, but gut feelings don’t win over finance.
What is Driving Your Warehouse Space Issues?
Most space constraints aren’t actually about growth. They’re about congestion, complexity, or clutter. Problems that often stem from inventory decisions, poor slotting, or SKU creep.
As expert Jakob Beer says,
“
But high fill levels in a warehouse are rarely the real problem—they’re a manifestation of something else:
- Slow-moving or obsolete stock that no one is managing
- Poor forecast accuracy
- Inefficient order quantities
- Procurement-driven volume discounts
- Excessive SKU proliferation
- Safety stock that was never recalibrated
- No coordination with sales or marketing on promotional volumes…
More often than not, the root cause will lie outside the warehouse: in planning, in procurement, in data, or in the lack of cross-functional communication.”
Jakob was writing about automating, but the same principle applies to expanding to a new site. Before deciding to expand, take a hard look at your current operation. Are seasonal peaks being planned for or merely absorbed? Has dead stock been written off or just relocated? Are layout changes and racking options maxed out?
Nick DiFlora , Sr. Supply Chain Consultant at PL Programs, puts it plainly: “Obsolete inventory could be taking up a good percentage of your warehouse—without you realizing it.” And when that space is gone, teams start getting creative, adding workarounds, overstuffing locations, and losing pick efficiency in the process. You end up with your own version of Hangar 51.
Sometimes the real problem isn’t space, it’s ownership. As Nick explains, planners often avoid writing off inventory because it hits their numbers. So, the material lingers, sitting in prime pick zones, slowing operations, and forcing costly overflow space later. “If you just send it to the planner, it’s not going anywhere,” he said. “It’s on operations to make the case and show what it’s costing the business to keep it.”
This speaks to the fundamental principal-agent exec governance issue that drives problems in many warehousing environments: Responsibility for the cost center performance is often pushed to the site lead, while the accountability for making the changes and fixing core problems sits at the executive level, and frequently in entirely different functions like Sales, Marketing, or other parts of Supply Chain, with their own very different performance incentives.
What looks like a space issue is often a symptom. Before you invest in more square footage, invest in understanding what’s filling the space you already have.
Do You Really Know Where Your Business Is Going?
Now’s the time to get clear on more than just the floor plan. Where is the business headed in the next 3–5 years? What throughput, velocity, or SKU diversity will be required to support that growth? And are your sales, planning, sourcing, and ops teams aligned with those projections?
As Nick put it: “I’d want to talk to sourcing, demand planning, and sales… or else we’re just moving the problem.”
If you’re building or moving without that clarity, you’re gambling. Worse, you’re risking another massive warehouse project two years from now. Warehouse expansion isn’t about breathing room; it’s about building in the capabilities, automation, and layout efficiency to meet future demand without starting over again.
Build With Intent, Not Assumptions
You’re not just adding space. You’re making a strategic investment. At the end of the day, operations and fulfillment are a cost center. Investments need to pay off operationally and financially. That means asking the right questions:
- Are we using automation to reduce headcount strain and walk time?
- Is this layout designed to flex with future volume, not just today’s constraints?
- What capabilities will this space unlock for customers, not just for convenience?
Too often, companies delay a move, only to rush into one later, without fixing the root causes. And when that happens, they end up with a bigger warehouse full of the same inefficiencies.
A Move Is a Multiplier—Of Good or Bad
If your space problems are rooted in process, data, or alignment, a new warehouse won’t solve them; it will just make them harder to see. But if you’re clear on where your business is headed, have pressure-tested your current operation, and are building in flexibility for the future, a move can be a powerful growth lever.
Don’t move because you’re uncomfortable. Move because you’re ready. Before you sign a lease or sketch a new layout, hit pause. PL Programs helps companies separate real growth needs from costly assumptions, so when you move, you’re not just getting more space. You’re getting the right space, with the right plan behind it.