Ask most people how a company decides where to put a distribution center and they will describe something closer to instinct than math: a CEO who likes a state, a broker with a good relationship, a headline about a “logistics hub.” The real process is duller and more useful than that. It is called center of gravity analysis, and it treats a supply chain the way physics treats a mass: find the point that minimizes total weighted distance across every supplier, customer, and shipment volume, and you have found the location that costs the least to serve the network from. Everything else is a rounding error dressed up as strategy.
The Math Behind the Map
Center of gravity analysis takes the coordinates of every demand and supply point, assigns each one a weight based on shipment volume, and solves for the position that minimizes total transportation cost across the system. It is a simple calculation, which is exactly why it holds up. The refinements layered on top by modern network design software, actual road distances instead of straight lines, seasonal demand swings, labor market depth, do not change the answer so much as sharpen it. They tend to confirm the same handful of places the simple version already pointed to.
What a Day and a Half Buys You
Indianapolis reaches 75 percent of the US and Canadian population within a day and a half’s drive, a coverage radius few other metros can match without stacking multiple facilities to do it. Pair it with two other nodes and the math gets better still: a Reno, Indianapolis, and Dallas network reaches 95 percent of the US population within two days, according to logistics providers who run exactly this kind of network. Louisville, sixty minutes down the interstate, sits within a day’s drive of two thirds of the US population and, by air through UPS Worldport, within a day of 80 percent of the world’s population. These are not marketing claims. They are the output of the same weighted-distance math every serious network designer runs before signing a lease.
Why the Model Keeps Landing on the Same Places
Run the center of gravity calculation for a company that ships across the continental United States and it will keep pointing at the same corridor for a simple reason: the population center of the country and the interstate and rail network built to serve it have not moved. Companies chasing the lowest-cost, fastest-reach network keep arriving at Indianapolis, Columbus, and Louisville not because it is fashionable, but because the geometry has not changed in a century and is not going to.
What This Means for Underwriting
We do not need a company to announce a new distribution center in this region for the thesis to work. The math already ran. It is why the logistics employers are already here, why the interstates converge where they do, and why the workforce housing near those employers stays occupied. We are underwriting a location that keeps winning a calculation, not a location that is hoping to.
Draymoor Ventures is seeking cash-flowing workforce multifamily, sized between 4 and 70 units, across the Indianapolis, Columbus, and Louisville metros, priced to work on today’s rent roll rather than tomorrow’s projection.
If your property already houses the people keeping this region’s freight and manufacturing base running, we want to understand the deal.
Sources
AIMMS, “Mastering Center of Gravity Analysis in Supply Chain Network Design.” https://www.aimms.com/story/cog-analysis-supply-chain-network-design-best-practices/