Site Selection Group took a look back to identify key site selection trends for distribution and warehouse projects from 2016. Overall, companies continued to grow their distribution footprints as the total number of announcements doubled to more than 1,000 announced projects in 2016 compared to 2015. While many of the megaprojects tended to steal the headlines, smaller projects accounted for much of that project growth. Although transportation and logistics efficiencies are the primary location drivers for these types of projects, workforce availability, business environment, real estate and economic incentives conditions heavily influence the final location of these projects.

Smaller distribution centers grew the most
From a capital investment standpoint, the growth in those smaller distribution center projects between 2015 and 2016 is clearly evident in the graphic below. The same can be said for number of jobs announced, with smaller projects accounting for the majority of announcements.  More distribution centers are requiring less than 100 jobs.

It is apparent that companies are focusing on optimizing logistics to shorten delivery times with a network of locations that include fewer jobs at each facility. In addition, heavy investments in automation have also reduced headcount in these operations.

Number of Announcements by Investment Size

Number of Announcements by Investment-distribution.jpg

Number of Announcements by Jobs

Number of Announcements by Jobs- Distribution.jpgTop states for distribution center announcements
The top states by number of jobs announced in the distribution sector in 2016 were Illinois, Ohio, Texas and Tennessee. Other states with job announcement totals of 2,000 or more include Pennsylvania, California, Georgia and Kentucky. The map below displays states with more than 100 jobs announced. 



Top companies announcing distribution centers in 2016
Some companies on the most active list of distribution center announcements should come as no surprise.  The interactive map below displays the announcement by company as you scroll through the pages.

1. FedEx

FedEx announced nearly 30 new or expanded distribution centers last year for both air and ground operations. The average job count was 125, and the average capital investment was $32 million. Announcements spanned the country but were focused mainly on the Midwest and Southeast. Additionally, its supply chain business line – formerly GENCO – added another five announcements.

2. Amazon

Continuing to disrupt the retail industry with quick delivery, Amazon opened or continued to invest in more than 20 distribution centers in 2016. The company also accounted for seven of the top 10 announcements when ranked by number of jobs. As mentioned in a previous article How New Age Distribution Centers are Affecting Site Selection, these projects usually require a large workforce. This analysis supports this with an average of nearly 650 jobs per announcement. The average capital investment was $65 million.

3. UPS

UPS announced seven expansions or new distribution centers. Similarly to FedEx, the locations vary across the entire United States. The average investment was $126.8 million with an average job count of 44, making UPS the most capital intensive but least workforce-intensive of the top announcing companies covered here.

4. American Tire Distributors

Independent tire supplier, American Tire Distributors, opened or expanded five distribution locations in 2016, including one north of Fort Worth in the fast-growing Alliance development. On average, each announcement included 53 jobs and $7.8 million in capital investment.

5. Total Quality Logistics

Freight brokerage firm Total Quality Logistics announced five new or expanded distribution centers last year. On average, those projects accounted for a moderate capital investment of $700,000, but with a relatively larger workforce requirement of 90 jobs.



Top Distribution Center Site Selection Trends 2015


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