When Amazon adjusts its logistics strategy, the entire US retail sector realigns. A leaked report detailing internal corporate plans under the code name Project Mercury is currently causing significant movement across the industrial property sector. The scheme envisages expanding the company's dedicated same-day delivery network to more than 1,000 locations. This would position fulfilment centres within a maximum 10-mile radius of 80 per cent of US Prime customers, making around 90,000 high-demand items available within the shortest timeframes.
This development is attracting keen attention within the property sector. Brandon Page of Blackstone-backed landlord Link Logistics stated that the move would have serious implications for certain submarkets and force competitors to react. While Amazon spokesperson Steve Kelly emphasised that these were preliminary planning documents, he reaffirmed the group's strategic focus on further reducing customer delivery times through the expansion of its same-day network.
Convergence of retail space and inner-city logistics
Growing demand for instant deliveries is fundamentally altering the interplay between retail and industrial property. According to data from industry service CompStak, the e-commerce share of total US retail sales reached 18.9 per cent in the first quarter of 2026, surpassing the previous pandemic peak of 16.3 per cent. In the second quarter, the share stood at 17.1 per cent. Concurrently, competitor Walmart recorded a 24 per cent increase in delivery volumes in the second quarter, while 30-minute rapid deliveries rose by 48 per cent across what are now 38 markets.
According to Jason Tolliver, head of logistics and industrial for the Americas at Cushman & Wakefield, the last-mile segment has the lowest vacancy rate across the entire industrial property market. The pursuit of maximum delivery speed is triggering a rush into urban-fringe locations, driving significant rental growth for smaller warehouses and inner-city infill sites. In addition, the boundaries between store premises and logistics space are increasingly blurring, as retailers progressively use existing branches as staging areas for outbound deliveries.
Strategic responses from leading chain retailers
- —Walmart is establishing so-called Spark depots within former sales space and testing 3D-printed building extensions to create dedicated collection and delivery hubs.
- —Home Depot is using more than 2,000 store locations for an express delivery service that delivers goods to retail customers within three hours.
- —AutoZone is allocating the bulk of its $1.6 billion capital expenditure this year to new mega-hubs for regional goods distribution.
- —Tractor Supply is planning new stores with almost three times the footprint of conventional outlets to provide additional capacity for online orders.
Beyond customer acquisition, the expansion of urban logistics capacity serves primarily to control rising transport expenses. Estimates suggest that more than half of all delivery costs are attributable to the last mile. Zac Rogers, associate professor of supply chain management at Colorado State University, points to tight margins, a 75 per cent rise in diesel prices since the start of the war in Iran, and driver shortages. The oversupply of e-commerce space accumulated during the pandemic has largely been absorbed, prompting retail groups to invest targeted capital once again into expanding physical capacity.
