WASHINGTON, DC–Businesses in all industries, not just retail, would do well to reframe the concept of “last mile” into one of “last touch,” David Egan, CBRE's global head of Industrial & Logistics Research, tells GlobeSt.com.
“There isn't really a last mile anymore,” he says, noting that the location of last-mile distribution facilities opened within the past two years are positioned, on average, between 6 and 9 miles from the center point of the largest population areas they serve.
Denser cities tend to have shorter average distances, according to a CBRE study on the issue, such as the 6-mile average in San Francisco and the 6.8-mile average in the Washington, D.C.-Baltimore region. Meanwhile, cities that are more spread out have longer averages, such as 7.5 miles in Houston, 8.5 miles in Phoenix and 9 miles in Southern California's Inland Empire.
More to the point, “when the topic comes up the focus is almost always on the idea of quick delivery,” he says. “Overnight isn't fast enough anymore — it must be same day or even hour delivery. That is what consumers expect now and not just with deliveries.”
Expectations have increased even from a year ago and they have broadened to include service companies, Egan says — such as a plumber or electrician.
“Anyone looking to set up operations needs to be strategic about their time to the customer — how quickly they are able to service the customer from that location,” he says.
“The customer has been trained to expect best in class, very quick and inexpensive service in almost every aspect of retail. So the provider is saying to itself, 'how do I make that happen?' It knows it has to understand its customers, what they want and where they live.”
For these reasons, development of last-mile — or last touch — strategies is still in the early stages, which means the average distances in many metros is likely to shrink a bit more in the coming years, Egan says. “We're also likely to see many different types of real estate considered for last-mile centers.”
“There is a dynamic underway that is going far beyond e-commerce. It is a much bigger story that has to do with the consumer-provider relationship.”
WASHINGTON, DC–Businesses in all industries, not just retail, would do well to reframe the concept of “last mile” into one of “last touch,” David Egan, CBRE's global head of Industrial & Logistics Research, tells GlobeSt.com.
“There isn't really a last mile anymore,” he says, noting that the location of last-mile distribution facilities opened within the past two years are positioned, on average, between 6 and 9 miles from the center point of the largest population areas they serve.
Denser cities tend to have shorter average distances, according to a CBRE study on the issue, such as the 6-mile average in San Francisco and the 6.8-mile average in the Washington, D.C.-Baltimore region. Meanwhile, cities that are more spread out have longer averages, such as 7.5 miles in Houston, 8.5 miles in Phoenix and 9 miles in Southern California's Inland Empire.
More to the point, “when the topic comes up the focus is almost always on the idea of quick delivery,” he says. “Overnight isn't fast enough anymore — it must be same day or even hour delivery. That is what consumers expect now and not just with deliveries.”
Expectations have increased even from a year ago and they have broadened to include service companies, Egan says — such as a plumber or electrician.
“Anyone looking to set up operations needs to be strategic about their time to the customer — how quickly they are able to service the customer from that location,” he says.
“The customer has been trained to expect best in class, very quick and inexpensive service in almost every aspect of retail. So the provider is saying to itself, 'how do I make that happen?' It knows it has to understand its customers, what they want and where they live.”
For these reasons, development of last-mile — or last touch — strategies is still in the early stages, which means the average distances in many metros is likely to shrink a bit more in the coming years, Egan says. “We're also likely to see many different types of real estate considered for last-mile centers.”
“There is a dynamic underway that is going far beyond e-commerce. It is a much bigger story that has to do with the consumer-provider relationship.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
