Why same-day delivery will not happen under the new zoning ordinances
Uh oh… looks like Amazon will over-promise and under-deliver in markets like Charlotte.
…And there’s a good chance its promise of same-day delivery will be reneged on.
Why? As Amazon tries to keep up with the growing trend of consumers who want same-day delivery, we are seeing a growing tension in markets like Charlotte over how to get your goods from warehouse to doorstep.
In logistics, location is everything. To support same-day or same-hour delivery, all retailers, not just Amazon, have to rethink where their warehouses are located. As a result, many are moving away from large facilities on the outskirts of town and toward warehouses in infill locations near the CBD. And those cool urban buildings that were once thought to be “functionally obsolete” or just cool artist lofts are now becoming “micro-fulfillment areas.”
“Some of these older, presumed obsolete buildings are the most valuable—they sit right in the middle of the urban core. We don’t see this trend slowing down.”
-Al Brooks, Head of JPMorgan Chase Commercial Real Estate
Insider Intelligence says that last-mile logistics now comprise about 53% of the shipping cost. Ouch.
So companies are moving forward with tried-and-true and new technologies, both on the ground and in the air, to cut costs and meet customers’ demands for quick delivery while still meeting their needs.
Was that a Chinese spy balloon the Air Force just shot down…or your order of laundry detergent and bubbly water?
But last-mile innovation can only happen when the government, private companies, and communities all work together. Unfortunately, zoning officials don’t think much of the value of distribution space, and the new zoning rules in Charlotte make it hard to build infill warehouses.
The old way of thinking still rules. Even though micro-distribution centers should be as close to your home as your neighborhood grocery store, warehouses are undesirable.
While they can be located far away from the city, the trouble is, areas like Cabarrus, York, and Gaston counties are moving forward with their own progressive planning ordinances, pushing warehouses even further from where goods need to be delivered.
The modern warehouse is not what you might think it is. Warehouses give people a living wage and fill a very important need for getting goods and services to people quickly.
At Cardinal, we represented Domtar in their 226,000-square-foot warehouse requirement. This was a commodity warehouse that could be located just about anywhere. In 2018, the deal went to a new building located in South Charlotte near Westinghouse Boulevard. If we did the deal now, it would not be in the city due to a lack of availability and 50% higher rates. Instead, it would likely have gone to Chester County, SC.
But many of our clients are small businesses. They want to locate near their customers, employees, and homes. They are experiencing a tight industrial market, and few warehouses being developed. So, do not be surprised if your local plumber has relocated to Monroe.
That’s why the kinds of strategic partnerships we design create opportunities for our clients. We can identify the right partners, develop relationships, and structure deals that position our clients to succeed.
…And can even ensure that the cleaning supplies you ordered before your in-laws’ surprise visit get to your doorstep before they do.
Ways to Connect
Do you want to know more? Curious about our advisory and brokerage relationships? Got a topic you’d like to see discussed here? Email me at jculbertson@cardinal.re or call 704-953-5500.
