As e-commerce continues to raise the bar for at-home delivery speeds, traditional retailers and online-only companies are scrambling to meet the demand for raised customer expectations—and the last-mile warehouses that fulfill them.
“Last-mile” fulfillment does not refer to a literal distance, but to an essential link in the supply chain. It’s the final leg of the process that gets a good to a consumer and involves warehouse facilities in and around urban areas.
Competing to provide fast delivery to customers, retailers are vying for smaller, more agile warehouse space that can accommodate a large number of delivery vans in a location that reduces delivery time. As supply of these types of buildings are limited, demand has increased for last-mile facilities.
This supply-demand imbalance is chiefly evident in the western U.S., where low industrial rents, an essential feature for last mile, have grown by more than 10 percent annually in the last two years.
CBRE Research analyzed the 15 largest metro areas in the U.S. to evaluate how close last-mile facilities are on average to major urban population centers. Perhaps unsurprisingly, the San Francisco Bay Area benefits from last-mile facilities only six miles away, on average. On the other end of the spectrum, Southern California’s Inland Empire gets its goods from nine miles away. These distances speak to the overarching trend CBRE Research found, that highly urbanized and dense population centers are typically closer to last-mile facilities, while geographically larger suburban areas are farther away.
As any city dweller who expects same or next-day shipping knows, last-mile fulfillment is an integral part of the omnichannel retail experience. And as consumers increasingly expect more from their retailers, the retailer demand for last-mile facilities will continue to grow.
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