Distribution hubs are the new factory towns. Rather than producing goods as factories do, these facilities distribute goods that have been produced elsewhere.
Today's shipping concerns make one wonder what that future looks like, but nevertheless, these distribution centers are taking hold all over the nation, and Goodyear, outside Phoenix, is the next town to house one of these centers. GXO Logistics (NYSE: GXO) and Abercrombie & Fitch Co. (NYSE: ANF) teamed up for this latest deal.
A state-of-the-art warehouse
A new high-tech logistics facility will serve as the hub for Abercrombie & Fitch's West Coast operations. This 715,000-square-foot distribution center is set to be fully operational later this year. What's exciting about it, besides the 300 jobs it will provide for the town of Goodyear, Arizona, is its high-tech features.
There will be advanced automation, which means robots that will help with both productivity and safety. It will also feature intelligent analytics, which means artificial intelligence (AI) and machine learning, which will help with speed and efficiency in getting products out to consumers.
GXO, the world's largest contract logistics provider, already operates seven warehouses in the Phoenix region, including another facility in Goodyear. This latest facility brings the total square footage for GXO warehouses in the Phoenix region to over 2 million square feet. In total, GXO runs 208 million square feet in its 869 warehouses across the country. As large as GXO is, it holds only 5% of this fast-growing market, worth potentially $130 billion in Europe and North America.
About Abercrombie & Fitch
Abercrombie & Fitch is an old company that started in 1892. It took a bit of a nosedive in the 2000s when it became the most hated brand in America, becoming too cool for its own good. It branded itself as the store for the "cool kids" who weren't "overweight or unattractive." The stores were dark, smelled of cologne, featured shirtless male greeters, and displayed advertisements that were almost soft porn-like.
But Abercrombie & Fitch has since rebranded itself and is successful once again. The stores are bright, and the marketing is to outdoorsy people of all shapes and sizes.
Goodyear is an attractive location for distribution facilities. It's close to major West Coast metros, and its 247 square miles consist mainly of open space, of which 42% is vacant land. Almost half the residents have a long commute (over 30 minutes) to work compared with Maricopa County, where about 38% of residents have a long commute, so the jobs it produces are welcomed by many residents.
The real estate investor takeaway
Distribution centers, despite the current supply chain problems, will become a crucial element for quickly handling goods. High-tech centers, like this GXO/Abercrombie & Fitch one, will be better able to access current needs within the supply chain through its use of advanced and connected technologies to evaluate and act on a rapidly fluctuating market. Commercial real estate investors might want to learn more about this growing market.