overflowing warehouse

How to determine Warehouse capacity and know when to expand

Space is the most important aspect of your warehouse. If not managed properly, it can single-handedly undermine your business. Needless to say, knowing how to measure warehouse capacity is a crucial ingredient for success. 

If you’re wondering how to calculate the capacity of your warehouse accurately, you’ve come to the right place. This blog will explain how to calculate the capacity of your warehouse step by step, why it’s important, how you can optimize the existing space, and when it’s time to expand.

We’ve got a lot to talk about, so let’s take it from the top.

What Is Warehouse Storage Capacity?

Warehouse capacity refers to the usable space available in your warehouse for inventory. This includes areas used to store merchandise, load / unload goods, and fulfill orders, among other things.

Having enough storage capacity means your warehouse has the potential to enhance the bottom line and make workflows more efficient. 

Let’s begin by learning how to calculate the storage capacity of your warehouse.

How to Calculate Warehouse Capacity?

The following steps will help you determine the total storage capacity of your facility.

Step #1: Calculate the area of your warehouse (in square feet). For example, assume your warehouse size is 250 ft x 300 ft., So the area is 75,000 sq ft. (By the way, the typical warehouse size is 50,000 sq ft.)

Step #2: Calculate the amount of space that cannot be used to store inventory, for example, the office, bathroom, loading docks, staff break rooms, etc. Let’s assume these spaces occupy 10,000 sq ft.

Step #3: Calculate the actual usable space of your warehouse by subtracting the unusable space from the total square footage. So your warehouse has 65,000 sq ft (75,000 sq ft – 10,000 sq ft).

Step #4: Now note the clearance height of your warehouse by measuring vertical space (the distance from the floor to the highest possible place where you can store merchandise). Remember, you cannot go all the way to the ceiling. You will have to leave some space for overhead fixtures, lights, etc. Let’s assume the usable height is 30 ft.

Step #5: Multiply the clearance height with the total usable square footage to calculate your warehouse’s actual storage capacity. Continuing the above example, that would amount to 1,950,000 cubic feet (65,000 sq ft X 30 ft).

Now that wasn’t too hard, was it? 

Why is Warehouse Capacity Calculation Important?

Calculating the storage capacity is important for several reasons, including: 

1. Facilitates Decision Making

Calculating warehouse storage capacity empowers warehouse managers. They can make better decisions, such as knowing how much inventory to order and how to manage usable space efficiently.

2. Optimizes Warehouse Operations

When warehouse managers understand the actual storage capacity of a facility, they can improve warehouse workflows, optimize storage, and minimize the cost of warehouse operations. For example, they can order more products at one time to decrease transportation costs.

3. Helps Understand Storage Needs

Doing the math allows warehouse managers to assess the current storage capacity with existing storage needs. This enables a business to plan for growth. For instance, if the business has already reached maximum capacity, it can either expand the current facility or transfer to a larger one.

What Should be the Ideal Capacity?

You may think that using 100% of the warehouse capacity is the right thing to do. But in reality, it is wiser to aim for 80% of its storage capacity. 

What does this mean?

Storage capacity means the amount of utilized space in your warehouse as a percentage of the total usable storage space. So 80% capacity simply means an average warehouse size should leave at least 20% of its usable space free of inventory. 


First, utilizing the entire usable space of your warehouse means there is no additional space available in case of an emergency. Moreover, full capacity could lead to congested aisles, crowded racks, and cluttered docks. If inventory or storage suddenly changes, your facility may not be able to accommodate it.

Secondly, leaving some open space allows employees extra room to work. Warehouses at full capacity show a marked reduction in productivity. So offering more aisle space and room to sort or organize stock can help your employees process and complete orders more quickly and efficiently. But besides facilitating productivity, less-than-full warehouse storage capacity helps reduce congestion and keep the facility safer.

How To Optimize Your Warehouse Space 

There are several ways to maximize your warehouse’s storage capacity and provide more room for growth. Consider the following tips:

  • Rearrange the aisles, shelves, and racks to optimize the available space.
  • Increase vertical storage capabilities with customized storage solutions.
  • Add a mezzanine floor and modular office to utilize vertical space 
  • Use the right storage solutions for your warehouse and inventory needs. Invest in an assortment of warehouse racking and shelving options to make the most of the available space. Options include pallet racks, drive-thru racks, pushback racks, stackers, etc.
  • Implement an updated inventory management system so that you can monitor stock levels in the warehouse throughout the year. 
  • Avoid stocking up on seasonal inventory that sits on shelves for longer.
  • Use drop shipping so that vendors manufacture and ship merchandise directly. That way, you won’t have to worry about storing them.

When Is It Time to Expand Your Warehouse?

Before making any capital-intensive decisions to expand your warehouse, go ahead and try all the ideas mentioned above and optimize the current space. Also, consider the costs associated with the expansion to ensure the benefits outweigh the costs.

If your storage capacity exceeds 85% utilization, it’s time to expand your warehouse capabilities. However, the key lies in choosing the right option for your business. 

For example, if you have outgrown your warehouse, you can expand the current facility or relocate to a bigger warehouse. Opt for a route with a strong upside for internal operations and employee productivity. 

Manage Your Storage Capacity 

Managing the storage capacity of your warehouse isn’t rocket science. All you need to do is calculate the usable warehouse capacity and develop a custom storage solution for your business.

Avoid guessing your warehouse’s storage space. By following the guidelines mentioned above, you’ll know how much space you already have.

If you want to tap into your warehouse’s storage potential, one best option is to contact Midwest Distribution. We can help you increase storage capabilities and maximize space efficiency by designing custom storage solutions for your warehouse. 

Let’s collaborate and make the most of the space your warehouse already has.


Streamline your operations with our storage solutions

Jon R Marler

Marler is US Air Force Veteran with a career spanning 38 years owning and operating a commercial, multi-state real estate development company, material handling distribution network, and a management consulting firm.

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