Traditional warehouse space doesn't work for scaling businesses. Discover how flexible co-warehousing offers right-sized units, professional infrastructure, and community support without long-term leases.
co-warehousing | 2025-05-01
Warehouse space traditionally meant massive, empty buildings with long-term leases and hefty overhead costs—a risky proposition for small but growing businesses. Today, a new model is changing that equation. Flexible, right-sized warehouse space designed specifically for scaling businesses has emerged through co-warehousing communities, offering entrepreneurs the opportunity to escape their home offices without overcommitting to industrial-scale facilities they aren't ready for.
"I was stepping over inventory to get to my coffee maker," said one entrepreneur whose subscription box business had taken over her home. "My husband started calling our garage 'the warehouse district.' I was growing, sure, but my home was disappearing around me."
This scenario plays out in thousands of homes across America as e-commerce sales continue to surge. According to industry research, 63.8% of e-commerce businesses start at home, and by the end of 2024, global e-commerce sales are projected to exceed $6 trillion. All those products need somewhere to go—and eventually, that somewhere can't be your dining room.
Traditional options for warehouse space present significant challenges for growing businesses:
"It's that missing middle that nobody was addressing," explains Shannon Lerda, Co-Founder and President of Elevator, a company pioneering the co-warehousing model across the Midwest. "We saw entrepreneurs achieving great success only to hit this ceiling where their physical space became the limiting factor. They'd have a $50K/month business operating out of a 10×10 bedroom. It just doesn't work."
Co-warehousing represents a fundamental shift in how businesses access warehouse space. Rather than leasing empty industrial buildings, entrepreneurs can now secure right-sized units within purpose-built communities.
"Our warehouses/flex units are perfect for businesses with physical products or creatives looking for the perfect studio space," explains Emiliano Lerda, CEO of Elevator. "With a wide variety of size options available, our warehouse/flex units offer the ideal space to efficiently pack, store, and seamlessly run your operations."
The key features that differentiate modern flexible warehouse space from traditional models include:
Unlike traditional warehouse space that forces businesses to commit to more square footage than needed, co-warehousing offers units starting as small as 100 square feet. Businesses can expand incrementally as they grow, often within the same facility.
"We rented space here while updating our warehouse in Waterloo, and it was the PERFECT solution for our short-term needs," explains Sarah Ohrt in a recent review of Elevator's Des Moines facility. "The flexibility of month-to-month rentals made the transition seamless."
This flexibility proves crucial for seasonal businesses or companies experiencing rapid but unpredictable growth. One Elevator member in Omaha who sells Halloween decorations scales up to 800 square feet during his peak season (August-September) then down to 200 square feet the rest of the year—an arrangement impossible with traditional warehouse leasing.
Modern warehouse space solutions include essential infrastructure businesses need to operate efficiently:
This infrastructure dramatically reduces the capital investment required compared to setting up a traditional warehouse operation from scratch. For Tholi, an essential oils company with a patented product, this infrastructure facilitated rapid scaling from a single small unit to six units within four months. Within a year, they had grown enough to purchase their own manufacturing facility.
Unlike basic storage units or bare warehouse space, co-warehousing facilities offer the professional environment growing businesses need:
"Not only is it a great space to focus, but an awesome space for resources and networking," notes Laura Dueland, who utilizes Elevator's Omaha location.
This combination addresses a critical need for businesses transitioning from home operations—the ability to separate warehouse functions from administrative work while maintaining a professional image.
Perhaps the most revolutionary aspect of the new warehouse space model is the community that forms within these facilities. Unlike isolated traditional warehouses, co-warehousing creates environments where entrepreneurs can learn from and collaborate with one another.
"The community they've built is perfect for any entrepreneur or business looking to scale!" Sarah Ohrt shares in her review of Elevator.
This community element transforms warehouse space from a pure real estate transaction into a business development asset. At Elevator's Omaha location, digital marketing agency 316 Strategy Group closed $150,000 in new business within 60 days of moving in—all from connections made inside the building. They designed a trade show booth for a landscaping company, built websites for e-commerce businesses, took over marketing for an essential oils business, and helped a mortgage company repair their Google Business Profile.
"Levi even took time out of his busy schedule to help us with business planning, which was above and beyond!" notes Ohrt about Elevator's Vice President of Revenue, highlighting the additional expertise available within these communities.
For entrepreneurs evaluating their options, the financial equation of co-warehousing versus traditional warehouse space offers compelling advantages:
Traditional warehouse leases create substantial fixed overhead that remains constant regardless of business performance. A 2,500-square-foot warehouse (often the smallest available) in midsize cities currently leases for $11-15 per square foot annually, requiring a commitment of over $30,000 per year, plus utilities, internet, and build-out costs.
For a business generating $250,000 in annual revenue, this fixed overhead can consume an unsustainable percentage of cash flow.
Co-warehousing converts these fixed costs to variable expenses through:
By eliminating the need for large security deposits, lease commitments, and infrastructure investments, businesses can redirect capital to inventory, marketing, and product development—areas that directly drive growth.
Several Elevator members have mentioned reinvesting what would have been security deposits and lease commitments into new product development instead, accelerating their growth trajectories.
Beyond direct space costs, the operational efficiencies of purpose-built warehouse space create additional economic advantages:
One business at a co-warehousing facility in Seattle reported: "Co-warehousing cut our fulfillment costs by 38% while improving delivery times," while a Denver-based company noted they "reclaimed 25+ hours weekly for product development while improving shipping accuracy from 94% to 99.8%."
While the co-warehousing model benefits various business types, certain entrepreneurs find it particularly valuable:
E-Commerce Brands
Online retailers shipping directly to consumers need efficient fulfillment capabilities without excessive space commitments. The combination of warehouse units, shipping infrastructure, and flexible scaling options makes co-warehousing ideal for this rapidly growing segment.
Makers and Artisans
Small-scale manufacturers creating anything from jewelry to specialty foods benefit from production space that includes both creation areas and inventory storage. Many artisans transitioning from home-based operations find the step to traditional warehouse space too drastic, while co-warehousing offers an appropriate middle ground.
Subscription Box Companies
The cyclical nature of subscription businesses—with concentrated picking, packing, and shipping periods each month—creates unique space challenges. Flexible warehouse solutions with built-in fulfillment infrastructure perfectly address these operational patterns.
Growing Startups
Product-based startups experiencing rapid but unpredictable growth need warehouse space that can scale with their business without creating excessive fixed overhead during critical early stages.
Established Businesses Needing Temporary Space
Businesses undergoing transitions—whether renovating existing facilities, testing new markets, or navigating supply chain disruptions—benefit from warehouse space without long-term commitments.
For entrepreneurs contemplating the move from home operations to dedicated warehouse space, the transition involves several key considerations:
Several indicators suggest a business is ready for dedicated warehouse space:
Different warehouse space solutions fit different business needs:
When considering co-warehousing options, entrepreneurs should evaluate:
The evolution of warehouse space options has transformed what was once a challenging barrier to growth into a potential accelerator. By providing appropriately sized space, professional infrastructure, and built-in community, co-warehousing creates environments where businesses can focus on growth rather than logistics.
"The traditional warehouse lease is becoming increasingly impractical for today's agile businesses," concludes Shannon Lerda. "Co-warehousing isn't just a transitional solution—it's a fundamental rethinking of how businesses manage physical space in the e-commerce era."
This rethinking comes at a critical time for entrepreneurs. With supply chain challenges, economic uncertainty, and rapidly changing consumer expectations, businesses need operational flexibility more than ever. Modern warehouse space solutions like those offered by Elevator provide not just square footage, but strategic advantages in navigating these challenges.
For the entrepreneur currently navigating an obstacle course of inventory in their living room, or the business owner weighing the risk of a five-year warehouse lease against their growth projections, the emergence of flexible, community-focused warehouse space represents a timely innovation—one that removes barriers rather than creating them.
As Elevator continues expanding its model across the Midwest, with established locations in Omaha and Des Moines and a Kansas City facility opening in late 2025, more entrepreneurs will gain access to warehouse space designed specifically for their growth journey—spaces built by entrepreneurs who faced the same challenges and created the solution they wished they'd had.
Elevator operates co-warehousing communities in Omaha, Des Moines (now open), and Kansas City (opening second half of 2025) To learn more about flexible warehouse space options or to book a tour, visit elevatorspaces.com.