Four reasons tenants in the ‘heart of e-commerce’ corridor can’t help but expand

The corridor, comprised of Columbus, Cincinnati and Louisville, is the most desirable region in the U.S. for its ideal distribution location

Today’s retailers and logistic centers are expected to fill online orders within days, sometimes even hours. Forrester Research Inc. predicts that online sales will account for 17% of all U.S. retail sales by 2022. In response, the need for Class A distribution space in central locations has increased tremendously in recent years.

To accommodate demand, the Midwest region is ramping up development.

The Columbus market celebrated the groundbreaking of three speculative warehouses totaling 2.2 million square feet in the second quarter of 2019. This includes a 1.1-million-square-foot project in the Southeast submarket and an 827,000-square-foot project in West Jefferson.

In Cincinnati, warehouse development is at an all-time high with just over 10 million square feet currently under construction. This includes the 3-million-square-foot Air Hub at CVG and a build-to-suit project for Kroger-Ocado.

Louisville is also experiencing a high level of activity. Several institutional developers have secured land positions that could potentially introduce over 3 million square feet to the market in the next 9 to 18 months.

This trio of cities, known as the “heart of e-commerce” corridor, has evolved into a premier e-commerce and logistics corridor thanks to four main reasons:

1. Need for speed

The corridor offers unparalleled market access to consumers.

The region is within a 10-hour truck drive of 29 of the 52 major metropolitan areas in the U.S., which are home to more than half of the domestic population.

By air, the corridor handled 3.5 million tons of air cargo volume in 2017, compared to 2.9 million ton between Chicago, New York City and Newark, and 2.0 million ton in Los Angeles and Inland Empire.

The corridor is also home to six foreign-trade zones (FTZs), and both Ohio and Kentucky rank in the top 15 states for imports with FTZs.

2. Unique fit-out opportunities

Demand for quality industrial space is at an all-time high, and the corridor delivers on that need. Combined, the corridor has over 439 million square feet of warehouse inventory and has added 6.6 million square feet each year in modern bulk completions since 2013.

Developers now offer tenants the opportunity to customize their space — from loading docks, to design, to trailer parking and office layout. Additionally, developers are no stranger to the unique needs that come with warehousing. Forty-four percent of all corridor leasing activity since 2013 has been related to e-commerce operations.

3. Key tech amenities

Online retailers are responsible for the largest share of e-commerce square footage within the corridor at almost 16 million square feet. Meanwhile, traditional retailers are growing their presence online and setting up more warehouse operations in the corridor to remain competitive.

To keep up with demand, help companies thrive in the online world and streamline the shipping process, warehouses are adopting modern technologies. Renovations and custom projects include devices such as custom motion sensors, which optimize energy usage and save money.

Technology also attracts top talent, a major hiring advantage in a highly competitive industry.

4. Affordable top talent

Plentiful labor supply and the reasonable cost of doing business will allow for the corridor to continue its upward trajectory.

Living in the corridor is 28% more affordable than the national average and the average hourly rate is one dollar cheaper than the national average.

Read the full “Heart of e-commerce” report to learn more about how the corridor is shaping into a premier location in the U.S. for e-commerce investment, including a full breakdown of the corridor’s competitive advantage, cost considerations for companies and new speculative construction efforts.

Download the full report here.

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