Let's stop saying last-mile ...

Last-mile emphasizes a project's proximity to population centers and is used colloquially throughout industrial real estate to affirm a site's viability. It's in investment committee write-ups, financing requests, and marketing materials. It's catchy and it's spoken thousands of times daily: “this portfolio focusses on last-mile delivery for large millennial population” or “the construction of last-mile facilities in Chicago has exploded.” I'm not absolved either. I searched my inbox and found “prime location for last-mile distribution” in a brochure I recently approved. It's everywhere and yet it's meaningless. So, let's stop saying last-mile.

When I hear last-mile, I pause to evaluate a location. I think of projects we market as last-mile. I picture deliveries made in that micro-radius. Are there enough rooftops nearby? Are the sites truly last-mile? What about my office in the Loop? What does one-mile look like? There's the U.S. Post Office at Harrison and Canal but few others. So then where is the last-mile? Logistics Property Company (“LPC”) has a project at 37th and Ashland in McKinley Park. It's extremely close but at 6 miles from the office its outside the radius. Is it last-mile? I tell people it is.

My uncertainty led me to Amazon's website. Surely, they should have a clear definition of last-mile in their materials. Reviewing their annual reports from 2016-2018 there was surprisingly little. In 2018 last-mile wasn't referenced at all; and in 2017 it was referenced once: “And across the world, Amazon is contracting with our service providers to launch our first low-pollution last-mile fleet.” How could it be that the perceived last-mile delivery leader doesn't discuss last-mile in their annual reports? Maybe its semantics and that Amazon considers Prime to equate to last-mile. Reviewing the Prime offers there was again nothing, instead “Two-day”, “One-day,” “Same-day,” “2-hour,” “Amazon-day,” etc.

In a last-ditch effort, I Googled “Amazon and last-mile” and learned of an Amazon gig economy-based business called the Last Mile team, which “helps get customer packages from delivery stations to a customer's doorstep.” This was a program started in mid-2018 which intended to have non-Amazon employees use Amazon software and technology to create their own private delivery fleets. An interesting business opportunity but not what I was expecting for their last-mile strategy.

Amazon's lack of coverage of last-mile in their materials may be based on their continued refinement of the last-mile strategy. It could also be that they find it nebulous and focus on time versus distance instead.

I turned to their competition. What do Amazon's rivals say about last-mile? In the 2016-2018 annual reports of Target and Walmart there was nothing. Walmart uses time deliveries like Amazon and only one-hour delivery in the context of its Chinese market. There was no mention of one-hour delivery in Walmart's domestic activity. Target didn't talk extensively about one-hour delivery either.

I'm becoming convinced that last-mile isn't really being used outside industrial real estate.

I took my search to Prologis — arguably the largest owner of industrial real estate in the world with approximately 356 million square feet of industrial product as of December 2018. Prologis uses the registered phrase “Last Touch” summarized as, “with affluent urban consumers shopping online more than ever before, e-commerce providers are looking for warehouses and distribution spaces in cities. They need locations suitable for fast, efficient delivery to consumer's homes.” It's a good start but if I get a washing machine direct from a warehouse in Joliet is that considered “Last Touch?” It's certainly not last-mile.

It's strange but not surprising that the world's largest e-retailers and largest industrial property owners don't have a consistent message on last-mile. E-retail is in its infancy and supply chain ecosystems continue to be refined.

What one coins the delivery type really doesn't matter. Customers want their goods delivered fast; and developers and owners need sites that can satisfy that wave of demand.

We can't predict the tenants of our speculative buildings nor can we predict the required delivery times. We seek locations that tenants cannot refuse – sites that satisfy all delivery times. Our development in Bartlett serves the B2C and B2B customers in the western suburbs in well under an hour. 3711 South Ashland sits 6 miles from the Loop. It's a tremendous location for the food companies pushed out of the West Loop. Swift & Lake in Addison, one of the most accessible sites in our portfolio, has tremendous serviceability to the near west suburbs. The access to the interstate system is unparalleled. Are these sites last-mile? I'm not sure… maybe. But we're not saying last-mile at LPC.

• Aaron Martell is executive vice president – Midwest Region for Logistics Property Company LLC in Chicago