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Retailers Focus on Large Distribution Centers, Small Urban Warehouses for Fast Delivery
This article looks at how "retailers are honing their distribution center strategy to meet current e-commerce demands.
Key findings
Net demand for industrial space is on pace to exceed 200 million sq. ft. in 2015, and the vacancy rate dropped to 7.3 percent, almost a full percentage point down from the third quarter of 2014.
Two strategies have emerged to get products out quickly: A focus on expanding the “first mile” of distribution, such as building massive distribution centers with advanced robotics and RFID technology, to the “last mile,” where e-commerce retailers are leasing up older or smaller warehouses near urban centers to shorten delivery routes.
The last mile is the least efficient. Industrial properties in urban areas are more prone to be exposed to traffic problems, low-load factors, expensive courier services and dealing with product returns.
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