Internet-fulfillment drives strong recovery in logistics

Here's a sign of how things are changing in the logistics business in northern Nevada:

When Selective Real Estate Investments and Miller Industrial Properties began marketing a 271,000-square-foot distribution center at 550 Boxington in Sparks to potential tenants, one of their first steps was to win approval from the city government to use part of the building for retail.

With that zoning in place, the building was ready to market to e-commerce companies that could use part of the space for a showroom while filling Internet orders from a distribution center in the rest.

That's just another step in the rapid development of e-commerce fulfillment as a significant piece of the logistics industry in the region.

Unlike other distribution centers in the region, which ship pallets full of merchandise to store locations, the facilities serving online retailers handle one or two items at a time and ship them to individual consumers.

Toys 'R' Us opened a major distribution center at Tahoe Reno Industrial Center this autumn to handle Internet orders. Urban Outfitters is building a similar center at Sparks. Diapers.com fills orders for baby supplies and gears from a center a few hundred yards from the Toys 'R' Us facility.

In all, some 500 jobs have arrived in recent months at e-commerce centers in the Reno-Sparks metropolitan area, says Paul Kinne, a business development manager with the Economic Development Authority of Western Nevada.

The same factors that have made the regional attractive to traditional logistics providers good transportation, proximity to major Western markets, a good tax environment are proving to be an equally powerful job to Internet retailers, Kinne says.

And e-commerce is a growth market.

"On-line sales continue to grow about 20 percent year over year, and we have carved out a strong niche as a hub for on-line retail fulfillment," says Steve Reid, president of the Reno-based Bender Group, one of the region's largest logistics firms.

Eric Bennett, an industrial specialist with CBRE in Reno, says the company projects no ebb in demand from e-commerce companies.

In fact, he says, developers may need to undertake construction of new speculative distribution-center projects to meet the demand for top-quality space for big Internet distribution operations.

Reid, meanwhile, says his company also sees strong potential in the growth of northern Nevada as an export hub during 2012.

Bender Group isn't alone in seeing the region as a strong market for worldwide distribution.

DHL Global Forwarding, a unit of logistics giant Deutsche Post DHL, chose Reno as one of the locations for its first commercial branch offices early this year. The reason? It expects strong growth in global trade in northern Nevada.