Companies that deal with mass amounts of goods (think: retailers like Amazon) require robust logistics infrastructures to house and distribute their products to the appropriate end users.
Real estate is one of the most important components of an organization’s logistics infrastructure.
Logistics real estate, which includes distribution centers and warehouses, are essential to a successful business. To save time and resources, it is critical that logistics properties are located close to major highways and customers, while also meeting other criteria like appropriate dock doors and sufficient storage space at price points that are supportive of the respective business model.
While the specific characteristics of logistics real estate vary depending on the company that is using it, the following article outlines three of the most common locations for logistics commercial properties.
For more information about logistics real estate, read our Ultimate Guide to Logistics Real Estate Transactions.
Key Factors That Influence Logistics Real Estate Decisions
A vast array of companies rely on logistics real estate to store and efficiently distribute their goods. Thus, there are a variety of factors that determine which type of logistics property best suits a company’s needs.
Key factors may include:
- Consumer demand. The rise of e-commerce and demand for next-day delivery has resulted in many companies rushing to meet their customers’ needs through more “last- mile” distribution centers.
- A need for large amounts of inventory. To avoid stock shortages, especially due to supply chain disruption during the pandemic, some organizations are turning to distribution centers to store large amounts of inventory.
- Proximity to consumers and manufacturing facilities. Closer locations to customers and manufacturing means more efficient distribution and faster delivery times.
- Type of goods being stored. Are the company’s goods large in size? Can they be stacked? Do they need to be refrigerated?
- Available space. Companies must keep in mind that some locations, like densely populated cities, may require taller warehouses with smaller footprints.
These factors, paired with business goals and revenue projections, help organizations determine which type of logistics property makes the most sense for them.
3 Logistics Real Estate Locations You Should Know
Logistics properties may take the form of distribution halls, warehouses, transhipment halls, high-rack warehouses, or other special warehouses. These buildings tend to fall into one of three major logistic property categories: inner-city logistics parks, large-scale logistics parks, and business parks.
1. Inner-City Logistics Parks
The growth of e-commerce has required companies to develop shorter delivery routes to customers. If organizations expand to new regions, they likely will need to add additional distribution centers in inner-city logistics parks.
Logistics properties in inner-city locations are used to deliver goods to customers in “the last mile.” The last mile in supply chain management refers to the movement of goods from a distribution center to its final destination.
Inner-city logistics properties are most often used by courier and parcel service providers, fresh food logistics facilities, sales, trading, service, and light manufacturing operations.
2. Large-Scale Logistics Parks
Large-scale logistics parks are often located in less densely developed areas, also known as greenfield sites, located on the outskirts of a city or in secondary and tertiary markets. These areas of land are sought after for major distribution facilities and warehouses because they are uncomplicated to construct and offer ready access to highway networks.
These storage areas can be individually built or adapted to suit its tenant’s needs, making them easy to add to existing logistics real estate portfolios. Multi-market distributors, trading companies, industry, and logistics service providers that service an entire market or region tend to use large-scale logistics parks.
3. Business Parks
When it comes to size, business parks fall somewhere between small inner-city logistics parks and large logistics parks. They’re often located on the edge of a large urban or suburban area and are used by small and medium-sized companies, established companies that need to expand, and local businesses.
Logistics properties are a critical component of an organization’s supply chain—especially with the ever increasing consumer demand for more goods, faster. Thus, it is important for companies to evaluate and choose the right type of logistics real estate to fit their distribution needs. Are your logistics properties supporting or hurting your supply chain?
Want to learn more about logistics real estate?
With the rise of e-commerce, warehousing and logistics have become a critical component of many companies’ commercial real estate portfolios. To learn more about logistics real estate and the trends impacting your decisions today, take a look at our Ultimate Guide to Logistics Real Estate Transactions.