Owning the last mile
If I had a dollar for every time I heard the word e-commerce during UCLA Anderson's second quarter forecast I would have left the room a lot richer. E-commerce hasn't just changed how we get our cat litter and clothing, it's also reworking cities and that's about to change even more. With both Walmart and Amazon offering one day shipping, this creates a need for more warehouses closer to urban areas. I wonder if I'm the only one having flashbacks to Kozmo.com and the early promise of immediate delivery.
Industrial real estate used for e-commerce is different than other industrial real estate. There is a lot more coming and going from the space and a need for more parking. This may change in the future as robots start to handle more of the package gathering and shipping but for now, e-commerce is people-driven at every turn.
So if cities need warehouses, the challenge facing developers is to make them palatable to the community. This means making warehouses look a little more like creative office space and also making them better places to work. Sprawling boxy warehouses surrounded by acres of parking lots are not city-friendly. While multistory warehouses are the norm in other countries, it hasn't hit most U.S. cities yet. According to the panelists at the UCLA Anderson forecast, it's coming, and soon.
Earlier this week, Diana Olick ran an interesting piece on the rise of more cold storage. Despite the fact that Amazon has made big inroads into the food world through its purchase of Whole Foods, groceries only represent a fraction of e-commerce. While plenty of retail stores are closing down and a smattering of fast casual restaurants are also shrinking, for the most part food has remained immune so far. However as Uber Eats and Postmates take over that may shift.
Driving to the conference, I listened to an interview with Tyga on the radio. The interview asked if he cooks. He said no but said he loves to eat and waxed rhapsodically about Mr. Chow's being available on Postmates. I found this particularly interesting since Mr. Chow's has long been a place that celebs went to see and be seen. If young rappers are essentially "showrooming" their food, visiting restaurants occasionally and ordering the food at home more frequently (in addition to using services like Plated and Blue Apron), we may be in the midst of the next wave of industrial — the e-commerce kitchen.
When AV trucking becomes widespread, the last mile issue may become less of a concern but for now the biggest growth in real estate isn't led by housing people but by providing shelter for what they plan to buy next.










