The Rise of ‘Last Touch’ Industrial Real Estate: Why Warehouses Are Moving Closer to You

Over the past five years, industrial real estate has morphed to the MVP of post-pandemic CRE portfolios. And in 2025, one specific niche is taking center stage: last-touch industrial.

While “last mile” still dominates logistics buzzwords, “last touch” is more accurate in describing the real estate behind it. These are compact, urban warehouses, sometimes converted retail, flex, or low-occupancy office spaces and well positioned for same-day or next-day e-commerce fulfillment in dense cities.

Consumers Expect Speed & CRE Has to Keep Up

Customers are impatient and that isn’t going to change. According to the U.S. Census Bureau, e-commerce sales hit $1.1 trillion in 2024, making up over 15% of total retail and that is only going to increase.

With two-hour delivery becoming the new normal in major metros, warehouses can’t sit on the fringes of town anymore. They need to live inside the zip codes they’re serving. We’re seeing industrial players reposition smaller properties in LA, Chicago, Miami, and Houston but not on the outskirts, right in the middle of retails and mixed-use zones.

Office Conversions Are Fueling the Shift

In cities where downtown office vacancies are still hovering around 20%, Lessors are no longer waiting for white-collar miracles. They’re converting these properties into logistics-ready flex space. The demand for storage, fulfillment, and micro-distribution is outpacing any potential office rebound in urban cores.

In some municipalities, we’re seeing local planning departments greenlight adaptive reuse projects faster when tied to logistics infrastructure, especially if tied to job creation, EV fleet storage, or reduced delivery emissions. Cities want vitality, not vacancy.

Urban Rent Hikes & the Tenant Trade-Off

Not surprisingly, rents for well-located, small-bay warehouses are climbing, but unlike big-box facilities out in the boonies, urban logistics assets offer efficiency, not just space.

Even with elevated rents, Lessees are paying a premium to be closer to customers. That proximity cuts last-mile delivery costs, which account for nearly 50% of total shipping expenses according to Statista.

The trade-off is real. Small-batch fulfillment means Lessees need tech, automation, and serious storage optimization to make it all work in tighter square footage. Many are now looking at shared warehouses, dynamic leasing models, and short-term pop-up logistics spaces inside old malls or big-box stores.

Parking Lots, Strip Malls, and Air Rights Are Back on the Table

Developers with vision (and a stomach for zoning headaches) are pouncing on overlooked land: vacant parking lots, failed retail pads, even standalone drive-thrus. These oddly-shaped lots, once considered too small or awkward, are now prime for vertical industrial builds.

Multi-level warehouse design is heating up in markets with tight land constraints, especially near ports and freeways. Cities like Seattle, San Diego, and Boston are seeing creative use of air rights to build distribution hubs with truck-accessible ramps, dock doors on the second floor, and rooftop EV charging.

Eve’s Hot Take

This is a trend. Last-touch is the new location strategy for the most e-commerce brands, and smart real estate pros are already reshaping their portfolios to reflect it. We can’t go backwards. The office has changed forever. Thanks to autonomous vehicles, parking lots are going to be changing too.

The industrial sector is at a precipice and speed-to-doorstep is now a competitive advantage you can capitalize on. If your property isn’t helping your Lessee deliver faster, cheaper, and closer, it’s probably just taking up space.