I.CON Special Report: Industrial’s “Biggest Disruptor”
- Jun 20, 2016
Jersey City, N.J.—“It’s Only the Biggest Disruptor Since About Ever.” Cushman & Wakefield executive Ben Conwell included that description of e-commerce in an overhead projection during I.CON, NAIOP’s recent conference on industrial real estate, and it summed up the brave new world of logistics in the age of e-commerce.
During I.CON, the two-day conference organized by NAIOP earlier this month in Jersey City, N.J., a panel of experts addressed the meaning of “the last mile,” a term much used in logistics these days. The phrase refers to the last leg of delivery before an item reaches its final destination. “Whoever figures out the last mile in a cost-effective way wins the game financially,” said Conwell, senior managing director & head of Cushman & Wakefield new e-commerce and electronic fulfillment practice group. Before joining the firm last year, Conwell directed Amazon’s massive expansion of logistics capacity.
Though brick-and-mortar stores still account for the vast majority of retail sales, evolving consumer shopping habits are influencing the supply chain. Footwear retailers, for example, can realize “a lot more margin selling those shoes out of a warehouse than out of a downtown Macy’s” argued Curtis Spencer, president of IMS Worldwide Inc. By 2020, the U.S. will sell an estimated $480 billion worth of products by cross-border e-commerce and buy another $180 billion worth, Spencer noted, citing research by Tompkins International. That activity will require 160 new e-commerce-related logistics facilities at least 800,000 square feet in size. Also needed: about 110 new or repurposed facilities in urban areas ranging in capacity from 75,000 to 100,000 square feet, according to Tompkins International’s estimates.
In separate conversations during I.CON, veteran industrial real estate professionals confirmed reports of demand for those smaller facilities up to 100,000 square feet. “We’ve been strong believers in the opportunities for industrial development on infill sites in the urban core,” said Walter Byrd, a Transwestern senior managing director and industrial advisory specialist who is also co-leader of the firm’s operations in Florida.
And the industry’s biggest fulfillment company is preparing accordingly, speakers during the e-commerce panel explained. “In the last year, Wal-Mart has been quietly building distribution centers where they can hit 90 percent of the country in two days,” noted Kelly Pickard, CEO of Hackbarth Delivery Service. Based in Mobile, Ala., the 41-year-old firm provides logistics, delivery, warehousing and transportation services.
Asked to name an example of a market generally where e-commerce is driving demand for logistics product, Pickard reported that Houston is “building like crazy. We pay the highest rents (there) we pay anywhere.” Transwestern’s Byrd named Boston, San Francisco, New York City and New Jersey as additional examples.