networking – Static Routing Server Rack

I am currently installing a server rack for a customer, and they’ve asked a qauestion.

They want/need to optimise U space as to avoid paying overheads for U’s that aren’t needed.

The question they’ve asked, is whether or not they can use Static Routing with a L3 Switch.

This in their eyes would remove the need for 1 U, and would combine Switch/Router into 1 U.

It’s a valid question, however I am not sure how to answer it as ARP came to mind.

So, can we replace the Router/Switch with a good L3 Switch?

And if so, can we statically route to each Server in the Rack without generating massive ARP cache?