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CBRE: Same-Day Delivery Drives Demand for Smaller Distribution Centers in Urban Areas

As the race for same-day delivery dominance heats up, Amazon and Macy’s are neck and neck in several U.S. markets—and existing distribution networks can’t cope. According to a new report to be released this week from real-estate brokerage firm CBRE Inc., small, urban fulfillment facilities are the answer.

While Amazon’s Prime promises delivery within anything from one hour to two days, it’s cumbersome considering the online behemoth only has 50 fulfilment centers throughout the country.

Macy’s, however, has an ace up its sleeve. Taking a leaf out of the Alibaba playbook (which works with 15 different logistics partners to ship its orders speedily), the retailer has partnered with crowdsourced delivery provider Deliv to pick up online orders from its brick-and-mortar stores and drop them off with consumers that same day. This month, the service will expand to nine more markets, including New York City and Boston—and with some 886 locations nationwide, there’s massive potential to use more stores locally as distribution points.

But e-tailers without a physical presence don’t have that luxury. To that end, CBRE expects to see an uptick in “light industrial properties” of 200,000 square feet or less over the next several years, located in or near densely populated areas, as a means of preparing deliveries for the so-called “last mile.”

Researchers analyzed 44 neighborhoods that are home to probable online shoppers across 14 major metropolitan areas and, according to the report, found that Atlanta, Boston, Chicago and Philadelphia offer ample access to both e-commerce customers and light industrial space choices.

As David Egan, CBRE’s head of U.S. industrial research, told the Wall Street Journal, “You need to expand and make your supply chain much more complex if you want to be able to promise and deliver on that same-hour, same-day or overnight delivery everyone is coming to expect.”