Dive Brief:
- Distribution centers are popping up in the Midwest, from Indianapolis to Columbus, Cincinnati and on to St. Louis, Supply Chain Management Review reported last week. Previously, Pennsylvania, Texas and Southern California had previously dominated growth in industrial real estate.
- The boom in warehouse leasing coincides with low employment rates, meaning that wage increases for warehouse associates will likely outpace numerous other positions. Logistics managers too will probably see an increase.
- With business thriving, retailers who lease the distribution centers have become more open to cooperation with others and to discuss varying sales models.
Dive Insight:
Though it's too early to accurately predict e-commerce spending for 2017, in 2016, Black Friday sales alone were recorded at roughly $3.3 billion. And, with internet spending rising, the need to find, lease, and stock appropriately located space for all the goods to be purchased is a necessity, especially when quick fulfillment is required.
The expansion of warehouses into the Midwest is an acknowledgement of the purchasing power outside of major metropolitan hubs. While Pennsylvania warehouses allow for easy access to New York and the east coast, distribution centers in Indiana and Ohio have a multi-state reach: from Indiana to Southern Illinois, and Columbus, Ohio to West Virginia and Kentucky. A St. Louis distribution center can potentially serve Kansas, Oklahoma, and Arkansas.
The appearance of distribution centers within the Midwest is also unlikely to interfere with local zoning laws or cause offense within historical areas. While historically significant locations are valued, they tend not only to be fewer within the Midwest but also exist within parts of the cities unlikely to have warehouse appeal. Simply put, the Midwest has the room for warehouses, and truck traffic already exists.
