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Third-Party Logistics Companies' Impact on Industrial Real Estate

Due to growing competition for e-commerce sales, retailers and wholesalers are focused on expanding their supply chain operations. While some companies have the in-house capabilities needed to manage the logistics and transportation of their products, many corporations are unable to manage them in an efficient manner. Thus, many companies are outsourcing this business function to a third-party that specializes in supply chain optimization.

Third-party logistics (or “3PL”) refers to a company that provides outsourced supply chain services such as providing inbound freight management, distribution services, warehousing, order fulfillment, and outbound freight management. Additionally, a 3PL company may provide other specialized services such as inventory management, cross-docking, packaging, and last-mile delivery.

3PLs have had a profound impact on leasing activity and the underlying demand fundamentals associated with industrial real estate. As a result of growing e-commerce sales, 3PLs have been increasing their occupancy in warehouse and logistics space throughout the U.S.