Demand for smaller, urban distribution centers rising
As e-commerce continues to grow and evolve, more retailers are using smaller, urban distribution centers that are closer to their customers, according to research from commercial real estate company CBRE Inc.
As with much of the evolution of e-commerce, Amazon is driving the trend, according to CBRE.
CBRE Inc. notes that demand for industrial buildings under 200,000 square feet and in denser areas could increase. The company analyzed 44 neighborhoods that are home to likely e-commerce shoppers in 14 major metropolitan areas.
E-commerce is growing and evolving, but not necessarily the way it seemed it would just a decade ago. The drive toward same-day delivery and a push by some brick-and-mortar retailers to leverage their stores as online fulfillment centers is creating a more diverse logistics ecosystem, according to this report from CBRE Inc.
The trend seems not to be a complete shift from using larger fulfillment centers, but to employ smaller ones in more urban areas, known as “light industrial space,” to keep logistics nimble and perhaps cheaper.
Whether this diverse approach is actually cheaper may not be adequately known by the retailers under pressure to get their goods to their online customers quickly, says Jeremy Bodenhamer, CEO of logistics automation company ShipHawk.
"When the retailer figures out these unknowns and finally knows what these costs are consistently, ahead of time, they can then make that decision about free or subsidized shipping,” Bodenhamer told Retail Dive. “Then it’s a rational decision.”
The good news is that, for the time being anyway, smaller structures in these dense areas can be had at reasonable rents, with plenty still available in some areas, according to CBRE.
- Wall Street Journal Online Sales Leading Toward Smaller, Urban Warehouses
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