CSCMP's Supply Chain Quarterly
October 16, 2019
Forward Thinking

E-commerce firms flex their muscles on DC site selection

Growing heft gives e-commerce and 3PL firms greater location in picking warehouse locations.

CBRE map of e-commerce deals

E-commerce and logistics companies are claiming a growing share of the country's largest warehouse leases, a trend which gives them more leverage in choosing the optimal sites for locating their DCs, according to a study by CBRE Group Inc.

The e-commerce and logistics firms tracked by CBRE have growing influence over U.S. warehouse construction in comparison to other industrial leasing clients in industries such as manufacturing, food and beverage, technology and retailing, the report showed. That change is measured by e-com companies' rising share of the 100 largest industrial leases signed in 2018 compared to a year earlier, Los Angeles-based real estate and logistics services provider CBRE said.

CBRE found that 61 of the largest 100 leases in 2018 were signed by e-commerce companies and logistics firms, representing a total of 61.5 million square feet. Both those figures were up from their 2017 marks, when the same types of firms signed just 52 of the largest leases for a cumulative 43.2 million square feet of space, CBRE said. And that momentum is expected to continue in 2019, as both the e-commerce leasers and the logistics firms in the study—led by third-party logistics providers (3PLs)—ride a steady wave of online commerce.

In choosing the locations for their DCs, e-commerce and logistics companies were spread across 32 markets, but they clustered in a handful of leading logistics hubs, including California's Inland Empire (20 leases), Pennsylvania's I-78/I-81 corridor (11), Dallas-Fort Worth (10), Atlanta (nine) and Chicago (five), CBRE said. Additional large leases were signed in Columbus (four), Detroit (four) and St. Louis (three).

"These are among the leading markets that offer the high-quality logistics facilities that many of these e-commerce users are seeking," CBRE's Americas Industrial & Logistics Investor Leader Chris Zubel said in a release. "This activity builds upon itself when a region provides the transportation access, qualified labor pool, and state-of-the-art real estate that many e-commerce users need."

In choosing their sites, e-commerce companies also need to strike a balance between open, rural spaces and proximity to urban consumers, said Lior Elazary, CEO and co-founder of warehouse automation vendor inVia Robotics Inc. "Companies have been setting up warehouses closer to where people live," but not in densely developed cities, Elazary said in an interview. "They can't set up a 1.2-million square foot warehouse in a city, but they also can't set it up out in the country, because then it's more than an hour away and they can't provide same-day shipping."

Ben Ames is Editor at Large and a Senior Editor at Supply Chain Quarterly’s sister publication, DC Velocity.

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.

Want more articles like this? Sign up for a free subscription to Supply Chain Executive Insight, a monthly e-newsletter that provides insights and commentary on supply chain trends and developments. Click here to subscribe.

We Want to Hear From You! We invite you to share your thoughts and opinions about this article by sending an e-mail to ?Subject=Letter to the Editor: Quarter : E-commerce firms flex their muscles on DC site selection"> . We will publish selected readers' comments in future issues of CSCMP's Supply Chain Quarterly. Correspondence may be edited for clarity or for length.

Want more articles like this? Subscribe to CSCMP's Supply Chain Quarterly.