Big Box: networks, infrastructures and development centered around logistics giants

Since the 1970s, the US witnessed the rapid and widespread proliferation of the Big Boxes, enormous warehouse-type stores, much larger than the classic European supermarkets. Big Box stores have allowed companies such as Walmart, Target, Best Buy, Costco, Home Depot and many others to expand and become giants in retail and wholesale commerce.

Often criticized for being accessible only by car, and therefore going against the notion of sustainable urban development, and for killing small businesses, Big Box stores led to the building of malls around them as they attracted other large retailers of all sectors, from fashion to furniture, food to pets and countless others. Big Box stores anchored plazas with new office spaces, residential areas, hotels, clinics and dozens of small businesses such as barbers, phone repair shops, pizzerias and dry cleaners.  Thus were formed entire heavily populated neighborhoods that led to the expansion of the urban perimeter and the building of roads, subways, power and water lines.

Symbols of an American economy based on consumerism, Big Box stores also suffered crisis and periods on intense decline. The Covid pandemic inflicted a terrible blow on the Big Box industry, emptying the malls of their meaning. The long lockdowns due to the health emergency kept buyers away from stores and employees at home, drained supplies and disrupted supply and distribution chains. It looked liked the end but it was a new beginning. Especially for the sector that builds Big Box warehouses.

The pandemic led to an e-commerce boom and with it the need to reduce delivery times and maintain warehouses well stocked, giving new blood to an industry populated by giants.  Along American interstate highways, entire areas are filled with warehouses, data centers, distribution centers, the realm of 3PL (third-party logistics) and 4PL (fourth-party logistics) providers that manage all aspects of the supply chain for their customers. These buildings have all one thing in common: they are considered efficient only if enormous. From Big we have moved on to Huge!

Amazon, which re-invented e-commerce, built almost 200 fulfillment centers, sites completely equipped to receive, manage, package and ship any type of product, with an average size of 800,000 square feet (75,000 squared meters). In the US, Amazon has centers as large as 3.8 million square feet, equal to 66 football fields, in Wilmington, Delaware, and 3.6 million square feet in Tennessee. And it is not the only company to operate warehouses this large.

In Memphis, Tennessee, Nike operates its largest distribution center, 2,8 million square feet large. The plant, called the North America Logistic Campus, includes 33 miles of conveyor belts and manages 200 billion dollars worth of clothing, shoes and sports equipment that are shipped to Nike’s online clients, wholesale distributors and Nike stores.  In Milan, Illinois, instead, we find the John Deere’s Parts Distribution Center, which also totals 2.8 million square feet, and supplies parts to this leader in agricultural and gardening equipment.

Many of these facilities are built today with leading technologies and respect the highest environmental standards. Modern Distribution Centers use advanced robotics, augmented reality and virtual reality devices and even drones. This type of infrastructure can be found in every corner of the United States, with specialized developers that build and deliver ready-to-operate centers to be leased or operated for third parties. It is a construction sector that is living a golden age even though in some parts of the country, due to high levels of inflation, high rental costs have caused a slowdown.

“If the consumer stops spending because of high gas and food prices, that reduction in demand means that there are going to be less goods coming into warehouses,” Joseph Ori, CEO of Paramount Capital, a real estate investment consultancy based in Walnut Creek, California, told the New York times recently.

As delivery times speed up, demand for last mile warehouses, located within or near urban centers, increases as well. Warehouses are turning increasingly into high technology logistical centers.

Food warehouses cost four to five times more than other types because they include strong roofs and floors that can hold cooling units. Most of the demand for cooling units is concentrated in the main food producing states like California, Florida, Texas, Wisconsin and Washington.

Some large cities over time have become distribution and logistics hubs. These include Chicago, Illinois; Detroit, Michigan; Cincinnati Ohio; Indianapolis Indiana; Denver Colorado; Atlanta Georgia; Dallas and Houston in Texas. And there are large metropolitan areas with airline hubs and very active ports, like Los Angeles in California, where  the construction of important infrastructure, such as the new Gerald Desmond bridge made by Webuild in 2020, offers new access roads for the transportation of goods via road, rail or sea.