Developers Get Creative In Closing Industrial's Last Mile Gap

E-commerce sales is projected to double over the next 10 years spawning vigorous competition for consumers and their dollars. According to Jones Lang LaSalle’s report, “Urban Infill: The Route to Delivery Solutions,” consumers are now being promised same-day and even two-hour deliveries which has required businesses to evaluate various urban infill options in order to quickly and efficiently reach customers in and around major cities. Commonly known as the “last mile,” or facilities which can quickly distribute the goods to the customer especially in urban and densely populated areas, these strategically located distribution points are important to efficiency and low delivery costs.

“There is rarely a one-size-fits-all solution when it comes to logistics real estate, and increasingly it involves an integrated network of functional ‘last mile’ facilities,” says Greg Matter, Managing Director. “E-retailors and delivery companies are increasingly using urban infill to close the “last mile” gap – deliver goods to the consumers in a way that is cost-effective, creative and yes, quick.”

With so much pressure to capture the consumer dollars, developers are rethinking how to overcome the chronic “last mile” facility shortages including opening fulfillment centers in what used to be office buildings, neighborhoods, shopping centers and converted garage spaces. A good example, according to the report, is how JLL is helping the leaseholders of the Millennium Park parking garages, in the city’s center, to convert under-utilized space into a last mile urban fulfillment center. The first project of its kind in the US, the new space will provide 15-minute access to nearly 230,000 city residents and is designed for use by multiple e-commerce companies.

“Once the urban infill location have been determined, there are a variety of ways to deliver goods to the consumers such as eBikes, which can reduce any harmful emissions and expedites deliveries through narrow city streets with limited parking,” says Gilliam Campbell, Research Manager, Industrial.

E-retailors are also utilizing multistory warehouses to get the goods into densely populated areas and then to the consumers. Just as urban grocers went to multistory stores, urban warehouses are going to multistory facilities as well. In cities that have high land values, such as Seattle and New York City, multistory distribution centers are trending.

“Urban infill warehouse and distribution facilities are already extremely scarce, and conversions or redevelopment to other uses have already eroded available stock. Given that e- commerce sales are expected to double over the next decade, demand will only grow stronger,” says Aaron Ahlburn, Managing Director, Industrial Research, JLL. “Last mile distribution within dense U.S. cities requires the right location, the right space and the right price – and that will call for even more creativity in our industry.”

Jones Lang LaSalle, together with its subsidiaries and affiliates, is a global provider of real estate and investment management services.