Buildings in locations near dense population centers mean reduced delivery times, which directly equate to reduced delivery costs. As retailers continually seek cost-cutting ways to deliver packages, delivery services are testing and using a variety of different delivery methods, including use of smaller trucks, vans, and cars in urban locations, and the possibility of drones to make deliveries in some areas. The trend toward alternative transportation modes in urban locations closest to the customers is making access to the “last mile” even more critical for e-retailers.
The Physical Space
As large e-commerce providers and online retailers fight for space in urban areas, former industrial-use facilities and available land become more expensive. Warehouse users today — which include on- and off-line retailers — must find the correct size warehouse (or build one) that has access to a highway and/or waterway, zoning for commercial use, proximity to dense areas within the target market (millennials with disposable income), and an appropriate and ample employee base.
The Employee Base
The reality, though, is that more often the physical dimensions of the space aren’t as important as location, quick access to transportation, and proximity to customers.
One of the factors often overlooked in these areas is a built-in employee base. Large industrial warehousing facilities constructed in Class B or C urban locations become a significant employer of the local population. This includes not only the pick-and-pack employees, but also higher skilled maintenance, logistics, supply, and office workers to support the location.
Given the opportunity to create urban jobs in locations that have classically suffered from job loss, the one partner in any development or adaptive re-use that should be heavily considered is also the silver lining — government. Municipal governments in urban locales are always looking for large employers. By partnering with political institutions as well as with county, authority, state, and even federal entities in the target area, a developer or redeveloper not only creates a use that becomes part of the fabric of the neighborhood, it also has the potential to avail itself of everything from tax abatements and tax credits to potential grants or loans that may be available.
While some may lament that we have lost manufacturing jobs that we may never gain back, the trend of industrial warehouses cropping up in urban locations creates a whole new level of employment that will only continue to grow as the urban environment changes and adapts to new technologies and consumer preferences.