Warehouse location choice: A case study in Los Angeles, CA

Abstract

The purpose of this research is to understand how and why warehouses have changed location over time from central urban areas to the urban periphery: spatial decentralization. Over the last decade, the logistics industry has been restructured to transport large volumes of goods more quickly and reliably. Concurrently, the warehousing industry experienced changes in facility size and location: large warehouses have been built on the urban outskirts. This spatial shift is attributed to inventory and transport cost trade-offs: the gains from lower land prices and scale operation outweigh the increase in transport costs as warehouses decentralized from central urban areas. As a case study, I examine location choices of 5364 warehousing facilities in Los Angeles, CA. I hypothesize that (a) the location choice varies by facility size and (b) the location choice logic has changed over time. Results suggest significant differences in the effect of location choice factors over facility size and over time. For warehouses built before 1980, the most influential factors are local market, labor, and seaport/intermodal terminal proximity. In contrast, for warehouses built after 2000, lower land price and airport/intermodal terminal proximity have the greatest effects.