March 2017

NAIOP’s The Last Mile

On Thursday, March 9th, NAIOP hosted its “Last Mile” event at the Riverway Auditorium in Rosemont. The discussion covered the current state of e-commerce users, and the future of distribution during the “Last Mile.” Panelists included:

Mark Goode, Principal, Venture One Real Estate
Mike Senner, Executive Vice President, Colliers International
Mike Tenteris, Managing Director, Cushman & Wakefield
Jason West, Executive Managing Director, Cushman & Wakefield

State of E-Commerce

  • E-commerce sales are projected to reach $500 billion by the end of 2018.
  • Other e-commerce companies are looking for the most cost-efficient space, which is usually not going to be a BTS.
  • Third party firms will be handling returns.
    • Current distribution facilities aren’t setup to handle returns.

The Amazon Model

  • Amazon is getting creative with its space, whether it is converting a first floor office into a warehouse/distribution hub, or redeveloping unused parking garage space.
  • Distribution hubs are within 20 miles of 40% of the Chicago area population.
  • Leases signed by the e-commerce giant in the city were 5-year deals, however, 10-year leases were signed in the suburbs because they are uncertain of the hub and spoke’s sustainability long-term.

Today’s Shopper

  • Biggest drivers of demand:
    • Food & Beverage
    • Medical/Pharma
    • Mergers & Acquisitions
    • E-commerce

Couch potato shopper

  • Instead of going to a Walgreens, or other convenience stores, people are ordering things such as toilet paper and having it delivered.
  • Convenience stores could become a thing of the past.

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