The Rise of Last-Mile Distribution Centers and Their Impact on CRE
3 min read
E-commerce growth and shifting consumer expectations have fueled the rise of last-mile distribution centres. As online shoppers demand faster delivery times, businesses are rethinking their supply chains, moving fulfilment operations closer to urban centers. This shift is transforming the commercial real estate (CRE) landscape, increasing demand for strategically located warehouses and redefining industrial space requirements.
In this article, we explore how last-mile distribution centres shape commercial real estate and impact property values, leasing trends, and urban development.
The Need for Speed in E-Commerce
With next-day and same-day delivery becoming the norm, retailers and logistics companies prioritize locations near dense population hubs. Last-mile distribution centres, typically smaller than traditional warehouses, serve as the final step in the supply chain, ensuring products reach customers quickly and efficiently.
Impact on Industrial Real Estate
The surge in demand for last-mile facilities has driven up competition for well-located industrial properties. Urban warehouses, underutilized retail spaces, and even parking structures are being repurposed to meet fulfilment needs. As a result, industrial real estate values are rising, and vacancy rates in key markets are at record lows.
Zoning and Infrastructure Challenges
With the demand for last-mile increasing, municipalities face zoning and infrastructure challenges. Traffic congestion, noise concerns, and land use restrictions complicate the development of innovative solutions that balance logistics efficiency with community needs.
The Future of Last-Mile Distribution in CRE
As e-commerce grows, last-mile distribution centres will remain a key driver of industrial real estate trends. Adaptive reuse, automation, and sustainability initiatives will shape the next generation of fulfillment hubs. Developers anticipating these shifts and investing in strategic locations will be well-positioned to capitalize on the evolving logistics landscape.
The rise of last-mile distribution centres is redefining CRE, creating new opportunities and challenges for investors, developers, and tenants. Staying ahead of these trends is crucial for navigating the future of industrial real estate.
References
3 ways last-mile delivery is impacting local CRE markets. NAI Global. (2020, April 13). https://www.naiglobal.com/news/3-ways-last-mile-delivery-is-impacting-local-cre-markets/
What is the “last mile” and why is it important in logistics real estate decisions? Allegro. (n.d.). https://allegrorealty.com/articles/what-is-the-last-mile-and-why-is-it-important-in-logistics-real-estate-decisions
Hamann, J. (2023, February 19). How do supply chain issues impact industrial cre?. Industrial Property Loan. https://industrialproperty.loan/blog/how-do-supply-chain-issues-impact-industrial-cre/
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