Atlanta’s Industrial Property Landscape Getting ‘Edgier” on the Last Mile
It seems you cannot have a conversation about the industrial real estate market these days without mentioning the indelible impact that e-commerce and same-day delivery has on the landscape. Take a ride through the downtown Atlanta, intown and metro area, and you will see cityscapes dotted with delivery carriers of all brands: USPS, FedEx, DHL, and caravans of privately run delivery vans and vehicles.
The continued growth of e-commerce – which accounts for nearly 9% of all U.S. retail sales today—continues to reshape and recharge everything around it, particularly the logistics regarding supply chain management and transportation.
Simply put, consumers want what they want faster. The growing demand for products like pet food, razor blades and meal kits is forcing brands to offer myriad choices of delivery and flexible return options. The “last mile,” one of the key factors in the supply chain process, refers to the final leg of a product’s journey to the end user’s doorstep. In reality, the last mile can be anywhere from a few blocks to 50 or 100 miles.
Our newfound passion for an e-commerce way of life is creating new and exciting opportunities, especially in the industrial real estate space. To help accommodate quick delivery turnarounds, brands and their counterparts are continually looking to fortify their warehouse and logistical spaces.
This is a model that keeps changing. We are seeing more and more major e-commerce companies building large distribution centers, as well as strategically targeting smaller spaces in and around the metro area. For example, in last mile delivery areas where vans or small trucks are dispatched, properties that were not considered the most modern are once again being considered. Because these properties are candidates for redevelopment, some investors are willing to bet heavily on their proximity. Some of these centers run two to three shifts, requiring a lot of people and drivers. Therefore, increased parking and other amenities are becoming a greater requirement.
Life on the last mile is creating other opportunities intown, too. Look around the intown and downtown Atlanta area and you will see older and smaller warehouses being converted into loft offices, daycares, retail shopping, restaurants, etc. The transformation offers less expensive options for these typical retail/office users with an “edgy” feel. The renovations are creating new energy and momentum to previously plighted or undesired locations. Properties that were once considered eyesores are now commanding premiums due to their location. Once redeveloped, people are moving to these areas, creating alluring work/play spaces.
The last mile factor and the industrial activity it inspires continues to move to drive investment and development across metro Atlanta and beyond. Demand remains high along all major interstate corridors of Atlanta.
Strong pro-business communities with a powerful sense for economic development continue to play a vital role in the success of these markets. Very quick access to the interstate systems also plays a critical role to the viability of these markets. The shorter the transportation routes, the better. Additionally, land availability and cost are key when considering the large footprint of industrial properties.
So, what does the future hold? It is a question we ponder daily. From an industrial developer and owner standpoint, there continues to be investment opportunities in areas that sit on the outskirts of metropolitan areas – outside the city centers – in primary, secondary and tertiary markets within the southeastern United States. Along with Atlanta, markets like Jacksonville, Florida, Louisville, Kentucky, Charleston and Greenville, South Carolina, and Nashville, Tennessee, all are great plays.
While shippers and brands seek bigger, better and faster ways to improve the last mile supply chain process, industrial property managers and developers will continue to help redefine the look of today’s urban city landscape, creating opportunities across all fronts.
Lisa Rhudy is vice president – asset management with Pattillo Industrial Real Estate. She and her team are responsible for the economic performance and the day to day operations of Pattillo’s existing portfolio of approximately 70 buildings totaling over 12M SF. The team handles the leasing, marketing, management, and any dispositions. She can be reached at firstname.lastname@example.org.
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