Rapid growth of e-commerce likely to fuel industrial-market momentum for years to come

Aug 14, 2020

A planned 2.2-million-square-foot Walmart distribution center in Hancock County is set to become the largest warehouse ever constructed in central Indiana, but experts say the region likely will continue to attract a barrage of major logistics facilities as e-commerce demand swells across the United States.

The $150 million Walmart facility is one of a dozen distribution centers exceeding 900,000 square feet to enter the Indianapolis market since 2011. And smaller infill facilities—such as Amazon’s planned 690,000-square-foot project near the Mount Comfort corridor—are growing in popularity, as well.

“Indianapolis is definitely a beneficiary of the movement … companies are making with their supply chains, and we would expect to see that trend continue,” said Pete Anderson, principal of investment and development for Carmel-based Becknell Industrial.

“The pandemic has accelerated most companies’ needs to implement their e-commerce strategy. And I think Indianapolis is very well suited for these types of projects,” Anderson said.

Companies building major distribution hubs in central Indiana in recent years include the pneumatics manufacturer SMC Corp., battery maker Energizer and retailer Kohl’s. And FedEx Corp. is investing $1.5 billion to expand its gargantuan facility by the Indianapolis International Airport, even as it builds a ground facility in Greenwood.

Industry insiders say it is less expensive for e-commerce firms to build, lease and equip with automation one gargantuan facility than multiple smaller ones. The scale of a 1 million-square-foot facility is breathtaking, equaling 21 football fields.

And Indianapolis’ central location in the United States—within a day’s drive of two-thirds of the nation’s population—gives it a built-in advantage.

Yet only the nation’s largest retailers—such as Walmart, Amazon and perhaps Target—are going to need buildings of that scale, Anderson said.

“After that, the retailers aren’t as broad-based in their categories,” he said. “They simply don’t have as much goods and services to provide, so they don’t need as big a facility.”