E-commerce penetration of North American retail, which surged to a mid-teens share of US retail sales during the COVID-19 acceleration, peaking near 16% in 2020 per the US Census Bureau (Canada peaked lower, near 10%, per Statistics Canada), fundamentally reshaped industrial demand by compressing the required delivery radius. Last-mile logistics operators need facilities within 30 kilometres of dense population centres to achieve same-day or next-morning delivery windows, pushing industrial demand into infill locations that had historically been passed over for cheaper exurban sites.
The resulting cap rate compression in urban industrial was among the sharpest of any CRE sector: per CBRE's Industrial & Logistics Market Outlook, average cap rates in top-tier last-mile corridors compressed from the high 5s to the low-to-mid 3s between 2017 and 2022, with subsequent modest decompression as interest rates rose.
Modern logistics facility specifications are a direct output of e-commerce fulfillment economics. Clear height is the most frequently cited spec: buildings constructed before 2005 typically offer 28-32 feet of clear height, adequate for traditional pallet racking but insufficient for the automated storage and retrieval systems (AS/RS) that large fulfillment operators deploy in buildings with 36-40 foot clear heights.
Dock door ratios are the second critical spec: Class A bulk distribution typically provides one dock per 8,000-10,000 square feet of floor area; last-mile and parcel sortation facilities require one dock per 3,000-5,000 square feet to handle the higher shipment frequency of e-commerce fulfillment. Truck court depth of roughly 130 to 140 feet for a single-loaded court, widening to about 185 to 200 feet where trailers are also staged or parked (a 53-foot trailer needs roughly a 105 to 130 foot turning radius to spot cleanly), and heavy power supply (1,200-2,000 amps, three-phase) are table-stakes requirements for institutional tenants and routinely cited in NAIOP's Development Magazine as thresholds for new Class A development.
Cold storage and refrigerated logistics represent the highest-premium industrial subtype, trading 150-250 basis points tighter on a cap rate basis than ambient industrial in comparable locations, per JLL's Cold Storage Market Perspective. The premium reflects barriers to entry: refrigerated construction adds $150-250 per square foot in hard costs versus ambient warehouse, the trained labour pool for operating cold facilities is smaller, and functional obsolescence risk is asymmetric; a cold building can be converted to ambient, but an ambient building cannot be converted to cold without structural reconstruction.
An underwriting-specific risk is the phase-out of R-22 refrigerant (completed in 2020 under the Montreal Protocol), which renders older cold buildings with legacy refrigeration systems functionally obsolete and requires full mechanical replacement before a credit institutional tenant will execute a long-term lease.
Industrial cap rates vary by subtype in a pattern that reflects reversibility, obsolescence risk, and tenant credit quality. As of 2024, per CBRE and Cushman & Wakefield market data, Class A last-mile urban industrial has traded in the 3.5-4.5% range in gateway markets; bulk distribution in major logistics corridors has traded 4.5-5.5%; mid-bay and shallow-bay flex product trades 5.5-7.0%; and manufacturing facilities trade at a wider spread still, reflecting the idiosyncratic tenant-improvement cost and functional specificity that makes re-leasing more expensive if a manufacturing tenant vacates.
Industrial went from an overlooked, high-yield sector to a core institutional allocation as e-commerce and supply-chain change turned warehouse space into critical infrastructure. E-commerce surged to a mid-teens share of US retail sales during the pandemic acceleration, peaking near 16% of total retail in 2020, and every online order needs storage, sortation, and delivery space behind it.
The result was sustained rent growth and, in the tightest infill markets, sharp cap-rate compression, which drew institutional capital that now treats logistics alongside office, retail, and multifamily as a primary property type rather than a niche.
Last-mile facilities are smaller buildings in or near dense population centres, prized for how quickly they can reach customers rather than for size or the newest specs. Bulk distribution buildings are large regional warehouses, often 500,000 square feet or more, that hold and move inventory at scale where land is cheaper.
Light industrial and flex product is shallow-bay space mixing warehouse with office or showroom, serving local and last-touch users. The three subtypes trade at different cap rates: last-mile tightest because of its irreplaceable location, bulk wider, and flex or specialized manufacturing wider still.
Clear height is the headline spec: pre-2005 buildings often offer 28 to 32 feet, while modern bulk targets 36 to 40 feet to support taller racking and automated storage systems. Loading matters just as much: bulk distribution typically provides one dock per 8,000 to 10,000 square feet, while last-mile and parcel sortation need one per 3,000 to 5,000 square feet.
Truck-court depth of roughly 130 to 140 feet for a single-loaded court, rising toward about 185 to 200 feet where trailers are staged or parked, and heavy three-phase power (roughly 1,200 to 2,000 amps) are baseline for institutional tenants. But location relative to population, highways, and labor is the single most durable value driver, which is why an older, well-located infill building can outprice a newer one in a remote submarket.
Last-mile industrial is smaller warehouse and distribution space located in or near dense population centres so goods can reach customers quickly, often for same-day or next-morning delivery. Its value comes from proximity to consumers rather than size, which makes infill last-mile assets hard to replace and typically the tightest-priced industrial subtype.
Last-mile facilities are smaller, close to population, and optimized for fast final delivery, while bulk distribution buildings are large regional warehouses (often 500,000 square feet or more) that store and move inventory at scale where land is cheaper. Last-mile trades at tighter cap rates for its location; bulk offers scale and modern specs.
Because e-commerce fulfillment and supply-chain reconfiguration have created durable demand for storage, sortation, and delivery space, driving sustained rent growth. Industrial is now treated as a core institutional property type alongside office, retail, and multifamily.
Modern bulk logistics typically targets 36 to 40 feet of clear height to support taller pallet racking and automated storage and retrieval systems. Older buildings often offer only 28 to 32 feet, which is adequate for traditional racking but limits how efficiently large fulfillment operators can use the space.
The core specs are clear height (36 to 40 feet for modern bulk), dock-door ratio (roughly one per 8,000 to 10,000 square feet for bulk, more for last-mile), truck-court depth for 53-foot trailers, and heavy three-phase power. Above all, location relative to population, highways, and labor is the most durable value driver.
Cold storage and refrigerated logistics trade at tighter cap rates than ambient warehouse because supply is constrained: refrigerated construction costs far more per square foot, the operating labour pool is smaller, and an ambient building cannot be converted to cold without structural work. That asymmetry, plus durable food and pharmaceutical demand, supports the premium.