February 25, 2026
This month, we’re breaking down why last mile facilities have become logistics’ hottest investment asset and what happens when cities like New York try to regulate them into oblivion. We’ll check in on meal kits, a red-hot $26 billion industry experiencing some growing pains. In trucking, FMCSA just finalized a rule that’ll impact who can hold a commercial driver’s license, leaving 200,000 drivers wondering what comes next. And finally, construction backlogs just hit a four-year low, yet contractors remain oddly optimistic. Go figure.
Wall Street has a new favorite asset, and it fits in a parking lot. While overall logistics rents across the U.S. and Canada have softened, particularly for big-box warehouses on city outskirts, investors are racing to snap up urban last mile facilities closer to where people live and shop.
The frenzy makes sense when you look at the supply picture. U.S. logistics construction starts have dropped to 12-year lows, and new projects can’t pencil because the data center boom is competing for the same land and materials, pushing replacement costs completely out of reach. Zoning isn’t helping. Southern California’s AB 98 now demands much wider buffers between warehouses and neighborhoods, effectively blocking permits in exactly the places tenants want most. Europe tells the same story, with 2025 and 2026 completions tracking about 40% below historical averages.
Demand is just as tight. When the $800 de minimis exemption disappeared, international sellers rushed to stock U.S. warehouses. Ares Real Estate leased 750,000 square feet to a single Asia-based fashion retailer, desperate to stand up domestic distribution before getting locked out. At the same time, 3PLs are eating traditional parcel carriers’ lunch on leasing volume, and the big institutional players have noticed. They’re buying up scrappy mom-and-pop infill portfolios and consolidating them into national platforms. Last mile delivery isn’t nearly as fragmented as it once was.
All that investor capital chasing last mile facilities hits a wall if cities regulate them out of existence. And right now, New York is flirting with exactly that. One-third of adult New Yorkers receive a package on any given day. Yet a wave of proposed policies are threatening to choke the very network that allows those packages to get to their front doors.
Many don’t realize that 88% of New York City’s transportation and warehousing businesses employ fewer than 20 people, and the system runs on family-owned, minority-owned operations. Take Team Cazar, a Queens-based company founded by Marine Corps veteran Rudy Cazares. It runs more than 150 delivery routes a day with 100+ W-2 employees. Businesses like this carry the full burden of staffing, equipment, and daily logistics on thin margins. They simply can’t absorb sweeping new costs. When they fold, the jobs go with them.
Then, there are the environmental consequences. Every last mile facility pushed outside city limits adds roughly 8,000 metric tons of CO2 per year, as the same package volume shifts to bigger trucks traveling longer distances. Deliveries slow, costs rise, and consumers and small businesses pick up the tab. The investors pouring billions into urban infill logistics are betting on proximity. New York’s policymakers would be wise to stop betting against it.
The meal kit industry is worth nearly $26 billion, per Straits Research, with projections pushing it toward $114 billion by 2033. But that kind of growth won’t come easy, because the space still has some glaring problems to solve.
Start with subscriptions. Subscription fatigue has pushed some major players to scrap rigid weekly boxes, and smaller brands now offer à la carte options. A SupportNinja report found customers trying to pause, skip, or cancel deliveries ran into tight cutoffs, unclear policies, and slow support. One ethnic cuisine cofounder, whose company pulls in $5 million annually and grows 50% year over year, put it simply: customers loved the food but hated being locked in. That push for flexibility is also driving retail partnerships with grocery chains and marketplaces to meet customers outside the subscription model.
There’s also a marketing problem. Regulators have targeted prominent brands over misleading “free” meal promotions. In November 2025, Oregon’s Department of Justice settled with one leading provider after finding that those “10 free meals” were really discounts spread across multiple orders requiring substantial spending. Auto-renewal practices are also under the microscope. None of this is fatal, but scaling to $114 billion will require earning, and keeping, consumer trust.
If you hold a non-domiciled commercial driver’s license, your world just changed. FMCSA finalized its crackdown on non-domiciled CDL standards. The agency kept the backbone of its 2025 Interim Final Rule but added a 30-day transition period after the initial immediate rollout earned a federal court stay.
The eligibility pool just narrowed. Only H-2A, H-2B, and E-2 visa holders qualify now, and every one of them faces enhanced interagency vetting. FMCSA eliminated Employment Authorization Documents after uncovering widespread noncompliance at state licensing agencies. Applicants must now present an unexpired foreign passport, specific Form I-94 documentation, and a clean run through the SAVE verification system. OOIDA President Todd Spencer backs the changes, calling the final rule “a major step toward safer roads, stronger accountability, and a more professional trucking industry.”
Here’s where it gets interesting for the workforce. FMCSA audited thousands of credentials and found that most non-domiciled CDLs carried five-year terms, not two, easing the immediate shock. That means roughly 40,000 drivers cycling out per year as credentials expire. Of the estimated 200,000 affected, only about 6,000 annually are expected to qualify under the restricted visa categories. FMCSA’s message to nervous carriers: you have five years and enough excess capacity to adapt without the wheels falling off.
The construction backlog slid to eight months in January, down 0.2 months from December and the thinnest pipeline the industry has seen in four years. Yet, builders and contractors seem strangely unbothered.
An ABC survey conducted January 20 to February 3 found only 13% of contractors expect their own sales to drop over the next six months, the smallest share since February 2022. ABC’s Construction Confidence Index for sales, profit margins, and staffing all ticked up to start 2026. Sales expectations are stronger than a year ago; profit margins and staffing outlooks point to growth, though both trail last year’s readings slightly.
In other words, contractors prefer their own outlook. What’s funny, though, is that roughly 46% of them expect other contractors’ sales to fall over the next two quarters. Everyone’s the hero of their own story.
The backlog dip also played favorites. Firms pulling in over $50 million in annual revenue posted year-over-year backlog gains, while smaller contractors saw pending work shrink. Infrastructure helped cushion things a bit, climbing to 10 months in January, nearly a full month above December. But commercial and institutional categories fell, dragging the total backlog down 0.4 months year over year. ABC chief economist Anirban Basu cautioned that the optimism has a shelf life, noting it “will likely depend on the extent to which borrowing costs can decline in 2026.”
No matter the story, one constant remains: freight has to move. First mile, middle mile, last mile — they all must hold under the growing pressure of customer expectations: the first mile off the production line, the middle mile delivery between hubs, and the last mile at your customer’s door.
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