Why Chicago Stands to Benefit from Last Mile Logistics Growth

Why Chicago Stands to Benefit from Last Mile Logistics Growth

Market’s central location, comparatively low costs, deep labor pool and diversified economy make it ideal for eCommerce and logistics companies

CHICAGO, Aug. 7, 2019 – As eCommerce continues to grow, companies that make, sell, store and transport goods are increasingly focused on the “last mile,” or the final leg of delivery to the end user. Already accustomed to two-day deliveries, today’s consumers are demanding shorter delivery times – including same-day and next-hour services – making Chicago a key market for last mile expansion due to a confluence of factors, including low costs relative to coastal markets, the availability of skilled labor, an extensive transportation network and centralized location, with more than 48 million potential consumers within a six-hour drive of downtown.

Cushman & Wakefield, the top industrial agency leasing firm in Chicago based on data from CoStar Analytics, has released “Go the Last Mile,” an infographic report with key stats illustrating Chicago’s appeal as a last mile logistics hub.

“Industrial vacancy in the Chicago area has fallen to its lowest level in nearly two decades, and much of that activity can be attributed to eCommerce and the ripple effect it is having on other industries as goods are transported faster than ever before,” said Larry Goldwasser, executive director, Cushman & Wakefield.  “Labor supply, robotics, and other emerging technologies have developers and users focusing not only on where last mile facilities are located, but also how they can be designed to maximize efficiency.”

As of May 2019, there were nearly 400 active Amazon distribution facilities in the U.S. comprising over 142 million square feet (msf). Other companies are following suit. By 2020, U.S. eCommerce share of retail sales will likely reach 11 percent. Companies focused on eCommerce are exploring and constructing vertical warehouses – underscoring the need to innovate in what has become a highly competitive industry.

Superior Reach & Logistics

Chicago is the top U.S. metropolitan area for intermodal volume handling nearly 6 million containers and trailers per year, outpacing other major U.S. cities such as Atlanta, Dallas, Los Angeles, New York and Seattle, according to a Chicago Metropolitan Agency for Planning (CMAP) report “The Freight System(stats below are also from the report).

  • $564 billion in goods weighing some 269 million tons are moved into and out of metropolitan Chicago each year by truck, rail, water and air freight.
  • One of two international airports in Chicago, O’Hare processes 1.8 million tons of freight worth over $200 billion each year.
  • Chicago’s nine major interstate highways host drivers clocking 35,116 annual vehicle miles.
  • The Chicago market’s 20 intermodal facilities provide 3,900 miles of rail lines.

Warehouse deliveries facilitate package deliveries

The construction of last mile facilities in Chicago has exploded over the past few years, with over 3.5 msf currently under construction or already delivered between 2015 and 2019, compared to the approximately 530,000 sf delivered in the market between 2000 and 2015.  Cushman & Wakefield represents several high-profile last mile distribution centers servicing the city, including:

  • Marina Crossings, a 633,059 sf speculative warehouse at 2075 W. 43rd St.  Finished in November of 2018, this is currently the largest completed industrial spec project in Chicago since 1905.
  • Exchange 55, a 1 million sf speculative warehouse under development at 3501 South Pulaski Road. Delivery is scheduled for Q2 2020.
  • Chariot Logistics Center, which sits on nearly 40 acres and features three state-of-the-art buildings ranging from 135,000 to 252,000 sf.
  • 3348 S. Pulaski Road, a 316,680 sf warehouse with 106,943 sf currently available for lease.

Building for the (not-too-distant) future

As retail store footprints get smaller, industrial spaces will need to get larger to accommodate more online sales. This is especially true in cities like Chicago, where an influx of jobs and people to the downtown core is creating a need for urban fulfillment centers capable of serving this fast-growing population base.

Going forward, the key to filling all of those mailboxes and package rooms may lie in repurposing space that’s expected to become increasingly empty: parking garages. Widespread adoption of ride-share services and, more recently, micro-mobility options, together with the slow but steady development of self-driving vehicles, has led experts to make bold predictions about the decline of vehicle ownership. A report from research firm Green Street Advisors estimates the 1 billion parking spaces in the country today could be cut in half within three decades. As a result, architects and developers are exploring how urban garages could one day be converted or replaced with last mile facilities.

“If you look at who’s driving demand for last mile, you’ll soon realize that almost any company providing goods and services has a need,” said Goldwasser. “And there’s no turning back. What seems ‘fast’ today will be standard or even ‘slow’ tomorrow. As a result, the need for last mile industrial only becomes more critical as consumers grow accustomed to these shorter delivery times.”

For additional Chicago area research from Cushman & Wakefield, visit www.cushwakechicago.com.

About Cushman & Wakefield:

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.

2019-08-07T17:12:21-05:00August 7th, 2019|Tags: , , , , , , |