How is the rise of e-commerce impacting demand for logistics real estate in Chicago?
In Chicago, the rise of e-commerce coupled with Americans’ preference for speedy deliveries has created unprecedented demand for distribution centers and logistics real estate. The demand for same-day or next-day delivery has helped drop the vacancy rate to new lows while causing construction starts to skyrocket. E-commerce has accounted for several of the largest transactions completed in Chicago in the last 18 months, with Amazon completing 4.4 million sq ft in deals.
Online retailers require more distribution space than traditional retailers, because they need to individually package single items. Historically, e-commerce distributors have demanded massive, single locations, but with the promise of faster delivery times the single warehouse model is becoming inefficient . Future demand for industrial space will come from the ‘last-mile’ fulfillment centers that are located a long major highways and have sufficient loading dock infrastructure. These fulfilment centers will be key to establishing delivery networks that allow online retailers to achieve delivery deadlines.
Research Manager – Chicago
Newmark Knight Frank