Source: J. P. Morgan —
As companies strive to meet consumers’ expectations for everything on demand, we’re seeing strategic shifts to optimize logistics from the warehouse to the front door. While these developments are often the hallmark of larger enterprises, real estate firms and midmarket companies alike can still innovate their operations with the right investments and suppliers.
“When considering the future of e-commerce, the focus is often on the digital experience,” said Al Brooks, Head of JPMorgan Chase Commercial Real Estate. “But the most meaningful change is happening outside the consumer’s view, in a company’s physical operations.”
Those that move first stand to gain a competitive advantage. Opportunities are emerging in three areas:
- Warehouse location
- Warehouse functionality
- Transportation
The shifting landscape of warehousing
In logistics, location is everything. To accommodate same-day or same-hour delivery, companies are reconsidering the positioning of their warehouses and shifting away from large, highly centralized facilities.
Urban warehousing
Companies are repurposing dormant urban buildings into last-mile distribution centers. For companies that already have footprints in cities, it might mean adapting part of an existing space to include micro-fulfillment areas. But for most companies, it means identifying unused buildings.
This demand is increasing both property values and operational costs. As volume decreases within each location, companies should remain focused on inventory management, leveraging data to inform what products should occupy the limited spaces.
