5 Ways Last-Mile Logistics Can Still Improve in 2019

As the holiday season makes a swift exit, many can relish in relaxation. It has become increasingly stressful to holiday shop; especially for last-minute gifts, as e-commerce and online retail has transformed the way we shop during the holidays as well as all year round. The hope that your package will get you to on time, by its expected delivery date is something that Amazon, Walmart, and other e-commerce and online retailers have yet to perfect. These last-mile logistics still have ways to improve to provide customers with the instant gratification of traditional retail shopping.

Let’s take a look at these 5 ways last-mile logistics can still improve in 2019 and beyond.

1. Create More Distribution Centers

Online retailers will have a need for more distribution centers, specifically ones that are located in areas where there is a great need for same day fulfillment. Amazon, a frontrunner in e-commerce innovation has set up fulfillment tents in vacant lots over the holiday seasons. Taking steps to get distribution centers into more urban locations with limited space is a way improvement can be made in last-mile logistics efforts.

2. Utilize Technology

Using Technology to enhance last-mile delivery and fulfillment can be extremely useful to e-commerce companies. Drones can be used to deliver packages even during holidays when most people are off. Robots have been implemented in many warehouses to allow warehouses to operate without human employees. These robots can work harder and longer. In fact, they have been being used in China to combat the fact that people no longer want to work the strenuous warehouse jobs. This allows warehouses to be more automated. With advancements and fine-tuning of this technology, it can continue to improve the way we receive shipments.

3. Laws Need Updating

Did you know there was a law that prohibits companies other than the USPS to deliver directly into mailboxes? This law was enacted in the 1930s and is incredibly outdated. If laws like these reformed, other companies could deliver more efficiently and securely.

4. Upgrades to Security

Speaking of secure deliveries, package thieves are becoming more prevalent in all areas of the U.S, specifically during the holidays. With new innovations to porch and package security options, e-commerce companies could save millions in losses per year. Implementation of delivery lockers for companies other than just Amazon could also provide a solution to thievery.

5. Continued Research

In a more general sense, continued research regarding new, undiscovered ways to increase the productivity of last-mile logistics and improve e-commerce is needed. Companies can hire great minds in fields such as technology, engineering, mechanics and science to come up with new advancements. As we see with companies like Amazon who often are on the cusp of new innovations, other companies soon follow suit. If companies remained competitive, it is possible the best idea may have not even been thought of yet.

As we enter 2019 there is always room for improvement, let’s see what will change by 2020 in regards to last-mile logistics.

Read More: https://www.cbcworldwide.com/blog/5wayslastmilelogisticscanstillimprovein2019

Cap Rates Simplified - Market Value of Income Producing Properties

Do you know how to value income producing property? Let’s say you have a small office condo that you want to sell, and need to determine the value.  If there are recent sales of comparable condos, then it’s fairly easy to figure out.  But what about a ground lease of vacant commercial land?  

You’ll hear a lot about the “cap” rate and you will need a fairly good understanding of what the cap rate means to arrive at the market value of your land.  First, you’ll need to make sure there really is some demand for the land.  This usually happens in densely populated areas where most vacant parcels are already developed and land prices are very high.  For example, in a big city along a high traffic roadway.  Alternatively, large vacant parcels outside the densely populated areas may be suitable for a ground lease when the cost to buy and build is beyond a user’s budget.

Remember, a new ground lease is when the owner leases vacant land and the lessee (tenant) constructs their own building on the land.  The lessee controls the building and the land, and pays rent to the landowner for the entire term of the ground lease.  The tenant usually also pays the real estate taxes on the land and improvements. 

Even after the tenant constructs their building, the landowner can still sell the land, it’s just encumbered by a lease - which adds value to that land because it’s income producing property that requires virtually no maintenance or management.  The tenant owns and operates the building and the grounds.  The only management required is making sure the real estate taxes are paid, which is usually the tenant’s obligation but should be verified annually by the landowner.

So, to value this ground lease, you would apply a capitalization rate “cap” rate to the annual net operating income generated by the ground lease.  So, let’s assume the rental income is $2,000 monthly for the next 50 years (long term ground leases are common).  The annual income is $24,000 if the ground lease has a triple net structure (NNN).  So which cap rate to apply?  Let’s start with basic math here.  Say you heard a buyer was looking to pay for property with cap rates of 7 to 8 percent.  You could determine what price to charge that buyer based on his requirement by dividing 24,000 by 7 or 8 percent.  The sale price would be about $343,000 if the cap rate is 7% and $300,000 if the cap rate is 8%.  So, from a buyer’s perspective, the higher the cap rate, the lower the purchase price.  That’s why you’ll see sellers advertising well located income producing property with high quality tenants on long term leases at cap rates of 4% to 6% in a strong market.  And you’ll see buyers asking to buy properties at cap rates of 6% to 8%.  

Up next, how to determine the cap rate for your property from recent sales.

For more information, contact Sally Marks at 904-349-5192.