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Jack Rosenberg, Chicago-based national director, logistics
and transportation, for Colliers International, a real estate
advisory firm that manages about 1. 7 billion square feet of
industrial property worldwide, said the Flexe model would
be “disruptive to 0.001 percent of the market.” He said
most lessors could not justify the costs of insurance and
deal documentation for arrangements of a short duration.
In addition, short-term deals don’t compensate the lessors
for the risk of having a recalcitrant tenant that doesn’t
vacate on time, or the potential for a fire or a hazardous
materials spill, he said.
“Very short-term requests are common for TV shoots,
advertising stills, video shoots, and movies,” Rosenberg
said. “My clients don’t want the bother.” In response,
Siebrecht said the contract’s language addresses as many
negative scenarios as can be imagined. He added that Flexe
does not accept transactions involving hazardous materials
storage.
Dale S. Rogers, professor of logistics and supply chain
management at Arizona State University and an adviser
to Flexe, said the model best functions as a supplement
to a company’s existing warehouse infrastructure and not
as a stand-alone operation. “It won’t replace the tradi-
tional warehouse network. But it gives you the flexibility
to do certain things” such as penetrating a hot market on
a moment’s notice, he said. For his part, Siebrecht said
Flexe’s customers are best served “putting a flexible and
elastic capability on top of an existing infrastructure.”
Rogers added that negative comments from industrial
developers are rooted more in their disdain for short-term
arrangements than in Flexe’s strategy and tactics. “No
industrial property developer wants to work with short-term leases where they have to turn over property so rapidly,” he said. “They want the predictability and security that
come with long-term arrangements.”
“LONG-OVERDUE” MOVE
Shanton J. Wilcox, vice president of supply chain management for Capgemini Consulting N.A., said Flexe is no
different from companies in other industries who create
“secondary markets” to inject liquidity into an otherwise
illiquid asset. For example, in the auto leasing business, a
secondary market exists for one party to assume a car lease
from another, Wilcox said. The same principle applies in
high-density urban areas like New York, Chicago, and San
Francisco where apartment subleasing is commonplace, he
said.
Wilcox added that the time and conditions are right to
apply the same model to the warehousing sector. “I would
say that it is long overdue in this area,” he said.
