2018 Hottest U.S. Retail & E-Commerce Fulfillment Markets

But no more….

Today, goods are ordered and purchased in stores, online via desktop computers, Smartphones and tablets, via phone, catalog and mail order and need to reach consumers and businesses in a myriad of ways.  No longer is the supply chain processing only palleted goods.  Today, the sheer volume of individual orders across the U.S. supply chain is staggering, necessitating more shipping carriers, last mile delivery providers, transportation modes, roads, etc. to get the goods to their final destination and meet consumer expectations.

Because of the sheer volume of individual orders, fulfillment warehouses and distribution centers must be constructed in ways that are different than used in decades past.  High ceilings, expansive facilities tens of football fields in square footage are now the norm.  Omnichannel fulfillment warehouses typically want larger bays with more room for trucks, high ceilings for high bay, computerized rack systems and plenty of warehouse space to accommodate a vast number of SKUs.  Warehouse space is also critical due to dynamic conditions, changing patterns of demand and fluctuations to meet consumer trends and the need for speed.

Combine this with the need to be close to major population areas and you can start to see the problem.  Yesteryear’s warehouse was built farther from populated areas, in more rural zones where land, taxes and labor were less expensive.  Today, because goods need to reach the consumer within two days, but often the same day or next day, goods need to be positioned closer to where consumers live and work-most frequently, urban areas.  Truck driver shortages, mandated use of electronic logging devices, fuel cost, traffic congestion near urban areas are all factors that are influencing the need to position warehouse facilities near population centers.  This is how the industrial real estate market is impacted.

Most major population areas are built out and do not tend to have much open space on which to place expansive warehouses that require a million or more square feet of space.  Some cities have infill zones or are in reconstruction mode, with plenty of aging buildings open to tear down, or have “dead” shopping malls or brownfield sites for development.  Lack of available land is the most significant problem in this raging e-commerce fulfillment-driven warehouse market.

Here is a look at three of the most popular industrial real estate markets for warehouse fulfillment and distribution centers in the U.S. in 2018:

Inland Empire California

Optimus Logistics Center

The e-commerce product fulfillment boom continues to fuel growth in sprawling Inland Empire and has attracted a New York developer with a commitment to build a $110 million, two building warehouse project.

The 1.45 million square foot warehouse project should be completed in summer 2018 and will be called Optimus Logistics Center.  The developer, Rockefeller Group bigger building is so enormous that contractors are using lasers to gently follow the curve of the earth when laying the concrete floors.

The two warehouse buildings will be able to service 232 trucks at one time.   Between the years of 2010 and 2016, 13 mega warehouses with 1 million or more square feet were constructed in Inland Empire.

Watson Industrial Park Chino (WIP Chino)

A 263 acre master-planned Class A industrial property has completed the lease up of the second phase of development after securing two leases totaling approximately 1.2 million square feet.  Upon completion, WIP Chino will consist of 5.1 million square feet in 11 buildings.  At this point, almost 2.6 million square feet has been finished in 5 buildings and is occupied.

Phase three of the WIP Chino projects includes over 1.4 million square feet in three new buildings.  Upon completion, phase four will begin with construction of an additional 1.1 million square feet of space in three buildings.

All phases of construction are projected to be completed by the end of 2019.  Strategically located with access to primary transportation corridors and freeways, the Ports of Los Angeles and Long Beach, the Burlington Northern Santa Fe and Union Pacific railways and numerous regional airports, WIP Chino has a prime location, ideal for warehousing, distribution and fulfillment operations.

Las Vegas Nevada

Sephora Warehouse

Cosmetics giant Sephora plans to build a 714,000 square foot warehouse at the Tropical Distribution Center in North Las Vegas.  Set to open in 2019, the Sephora fulfillment and distribution center facility will be adjacent to the new 2.4 million square foot Amazon fulfillment center. The Las Vegas Global Economic Alliance anticipates that the warehouse will employ up to 460 workers.

The Sephora Warehouse will include a distribution center for brick-and-mortar retail stores as well as an e-commerce fulfillment center to handle direct to consumer (D2C) shipping.  The Las Vegas Sephora warehouse will ship products to stores and consumers in 11 Western states.  Currently Sephora has 9 retail locations in Southern Nevada.

Sephora’s DC and fulfillment center will feature state-of-the-art automation and robotics systems, often used in the fast-paced world of e-commerce fulfillment to handle the onslaught of individual orders at rapid speeds

TJX, Bed Bath and Beyond and Walmart

With one of the largest distribution operations in Southern Nevada, TJX is poised to add onto its 700,000 square feet of warehouse space by adding an extra 400,000 of warehouse space.

The Las Vegas Valley has reaped the benefits of the investment in huge, speculative industrial buildings made by two major developers.  Warehouse space is a necessity for retailers looking to handle their e-commerce operations.  Companies including Fanatics, The Honest Company, Walmart and Amazon announced plans for warehouse, fulfillment or distribution centers in North Las Vegas between 2016 and 2017.

Ranging from 300,000 to 800,000 for typical industrial buildings under construction in Southern Nevada, the space is ideal for warehouse, fulfillment and distribution centers due to its easy access to roadways and rail.

Dallas-Fort Worth Texas (DFW)

Dallas-Fort Worth Attracts Major E-Commerce Fulfillment Warehouses

VMInnovations

VMInnovations, an online retailer that sells major brands of sports, outdoor equipment, home and garden and electronics products recently leased a huge industrial complex near Interstate 45 in southern Dallas County.  The industrial complex will be used for a new shipping hub and fulfillment center.  The site location is ideal.

Using the local last mile delivery services network, VMInnovations will be able to provide quick service of direct-to-consumer (D2C) deliveries in the southern region.  The South Dallas area is flanked by Union Pacific Intermodal 1.5 miles away and the second largest FedEx Ground facility in the U.S. 2.75 miles away.  The VMInnovations lease is the first in the new 754,897 square foot distribution facility.

Amazon

The South Dallas area certainly is hot.  Amazon is putting together a deal to lease over a million square feet of warehouse space on Interstate 45 in Wilmer for a distribution hub.

This would be the third major facility that Amazon has secured in southern Dallas County.  Currently Amazon already has eight distribution and sorting centers in the Dallas-Fort Worth area, including a 920,000 square foot warehouse south of Interstate 20 and a 500,000 square foot fulfillment center on I-20.

Conclusion

In the world of global ecommerce, from Phoenix to Hong Kong to the United Kingdom, the global ecommerce market is fueling the increased need for large scale warehouse and fulfillment center space close to major population centers, roadways, rail, ports and airports.  This is largely because consumers expect immediate delivery in less than two days.  The online shopping cart rules and the customer experience is critical.  Today’s supply chain is stretching in multiple directions to meet customer satisfaction objectives.

Selling online is complicated enough without having to figure out how to fulfill orders rapidly.  Online stores and retailers with ecommerce businesses are opting to position fulfillment warehouses and distribution centers close to population centers to reduce transport and delivery times and give themselves a competitive advantage.

This is the first in a series of blogs that will focus on the hottest retail and e-commerce fulfillment markets in the United States.  Stay tuned.  More coming your way soon.