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Where are all the Drones?

Sandy Romero • 5/10/2022
While drones have yet to revolutionize delivery services, they are making a bigger impact than you might think.


After years of hype about drones capable of delivering packages, groceries, lunch—nearly any item that one could think of—where are they now? And why aren’t they more prevalent today?

The reality is that they are prevalent, all around us—but we don’t see them because commercial drones have been working mostly behind the scenes in many sectors. From inspecting buildings to monitoring construction sites to capturing virtual tour videos, commercial drones have been making a significant impact for years, and the industry is poised for even more growth, especially in the delivery and logistics industries. 

Formally known as Unmanned Aircraft Systems (UAS) or Unmanned Aerial Vehicles (UAV), a drone is a small, unmanned aircraft weighing less than 55 pounds that typically operates via radio frequency, according to the Federal Aviation Administration (FAA) in the United States.1 They have innate intelligence and can fly, hover, navigate and avoid obstacles without pilot input, which is part of their appeal. 

Just as the global pandemic impacted the performance of many industries, the commercial drone industry saw a drop in demand, especially in the early days of the pandemic as cities and countries locked down and businesses closed. This ebb in demand, however, proved to be temporary. As demand returned, the drone industry grew rapidly as evidenced by the $2.3 billion companies poured into drones in 2020, 81% higher than the $1.3 billion they invested in 2019.2  

Since then, the global drone market has further expanded and is primed for more robust growth over the next five years. In fact, the $27.4 billion drone market today is expected to more than double to approximately $60 billion by 2026 with a compound annual growth rate (CAGR) of 16.3%. 

Industries that have been out front to date in their use of commercial drones include media and entertainment, energy, and real estate and construction. In fact, site surveys, commercial property aerial photography and aerial mapping were some of the first commercial uses for drones. One industry that has lagged others, yet is forecasted to grow the fastest in the near term: the delivery and logistics segment. It’s expected to experience a CAGR of 60% from 2021 to 2028.3 And as online shopping continues to surge, drones will become increasingly important for distribution and fulfillment. 

E-commerce trends that were already growing pre-pandemic accelerated after the virus forced lockdowns, spurred by online demand for goods and services, which in many cases became more of a necessity than a luxury. Two-day delivery times turned into next-day delivery. Same-day delivery has now increasingly become the expectation, and no commercial real estate sector has felt the impact of this demand quite like the warehouse and logistics sector.  

While fulfillment centers have struggled to keep up with demand, online retailers have taken steps to improve delivery times. Automation has helped. In the first months of the pandemic, when occupancy limits were put in place for warehouse workers, autonomous robotics became “essential workers,” roaming the warehouse floors, stacking, sorting and, in limited cases, packing goods for delivery. 

Warehouse and logistics facilities were already a high performing real estate type for more than a decade, but the demand for warehouse space has grown significantly during the pandemic. To keep up with demand, operators and investors are navigating an already tight market, supply chain challenges and land constraints in many prime locations to try to build new properties and convert older properties into newer fulfillment centers. Warehouse design trends, too, have accelerated with a new generation of facilities. Column spacing has grown to accommodate autonomous robotics, and clear ceiling heights have increased to allow for higher stacking. In a recent Cushman & Wakefield survey of tenant preferences, it’s clear that big-box tenants—500,000+ square feet—prefer larger clear heights (36’ or higher). 


These changes in warehouse and fulfillment center specifications have opened the world of drones to facility operators. Wider column space and larger clear heights lend themselves well to drones, allowing for autonomous navigation systems to function optimally. Additionally, inside warehouses and fulfillment centers, drones are not restrained by line-of-sight FAA regulations.  

But just what exactly are these drones doing in these large facilities? One answer is helping to keep track of all of the items that get shipped out to businesses and residences. 

One of the main functions that drones can perform inside the warehouse—and perform well—is inventory management. Staying on top of inventory is a priority for businesses, making sure high velocity goods are properly identified, monitored, tracked, picked, packed and shipped. Frequent inventory controls are among the tasks where drones can play a vital role, including stock and cycle counting.  

  • Stock counting:  
    Stock counting of large and uniform warehouses that contain numerous handling units above head-height is where the labor and time-saving benefits of drones will be most evident. Material Handling Exchange estimates that it would take approximately 80 people with handheld scanners and forklifts three days to complete a typical stock count for an average size uniform warehouse.4 One drone can complete the same job in two days, on its own and without forklifts. Given the current labor crunch, utilizing drones to perform these basic, repetitive functions can free up existing staff to focus on other tasks.  

  • Cycle Counting:  
    Cycle counting is an inventory management process where a daily or weekly inventory count of a smaller set of items in the warehouse is completed and used to represent the entire warehouse inventory. Cycle counting can be a huge time saver. However, operators have traditionally needed staff to do the smaller counts at a higher frequency. But drones equipped with Radio Frequency Identification (RFID) readers can easily scan the inventory barcodes at any level in the warehouse, at whatever frequency is optimal for operations. 

Because buy online, pick up in-store (BOPIS) shopping demand grew during the pandemic, brick-and-mortar retailers responded quickly by redesigning their store layouts to accommodate contactless shopping. Retailers even designated several parking sections just for BOPIS customers. Post-pandemic, these trends are expected to continue and expand. But retail’s rapid response to changes in e-commerce trends indicates that if and when drones begin delivering goods more widely to consumers, brick-and-mortar stores may need to quickly adjust their layouts to take advantage of drones to achieve same-day delivery. Retailers are already making some of those changes, including designating larger portions of their storage for e-commerce inventory. Another potential change includes creating drone-focused launch areas and pads that ultimately can be reconfigured from a BOPIS-designated space. 

While NASA’s drone, Ingenuity, continues to zip around Mars,5 performing amazing feats unhindered by power lines or recreational UAVs, drones on Earth are tethered to a set of regulations. These same regulations, however, may begin to soften in the near future, given recent tests of drone deliveries in several global locations, including the following examples: 

In Christiansburg, Virginia, Wing, the world’s first on-demand drone delivery service direct to homes and businesses, has been running a drone delivery test market in a residential neighborhood since 2019.6  

In the U.S., the Federal Aviation Administration (FAA) has given approval to drone company Flytrex to deliver within a one nautical mile radius as part of its partnership with Causey Aviation Unmanned.7 Flytrex currently operates drones in three cities across North Carolina and is launching services in the Dallas-Ft. Worth area to deliver food to consumer homes.  

Singapore’s goal to become a “Smart Nation” includes developing regulation that allows drones to operate autonomously throughout the country, including food and mail delivery.8  

Across several European cities, the European Union-led AiRMOUR project is paving the way for the use of emergency medical service drones.9 The two-year program will determine what steps the EU will need to take to implement drone technology at scale.  

In Coventry, in central England, construction has begun on an Urban-Air Port.10 The port is being designed as a hub for autonomous aircraft, including logistics drones.  

High-density, urban locations have been at the forefront of infill development and last mile delivery trends in recent years. Providing products and services to people faster through the congestion of high-density areas is a challenge—and the goalpost keeps moving. Drones appear to be at least one potential part of the solution. Integrated into smart cities of tomorrow, drones will be able to deliver both services and products faster than current methods. And as the appetite grows for drones to perform an increasingly broad range of tasks, city planners, property developers, architects and engineers will need to determine how drone services will impact building design. Urban planners are already including high-rise drone landing platforms in their plans for the city of the future, as recently featured at a recent Urban Land Institute (ULI) conference in Singapore.11  

How quickly this transformation will become an everyday reality is anyone’s guess. Until it does, commercial drones will continue to perform important but largely unseen roles across a variety of sectors. For their part, the drone and delivery industries seem confident the day will come when the ring of the doorbell or the alert on the smart phone will signal not the arrival of a Door Dash or Amazon driver but a drone at the doorstep. And if these deliveries come faster, more efficiently, and reduce carbon emissions relative to traditional delivery vehicles, they’ll largely be welcomed. If nothing else, perhaps we’ll have solved an age-old conundrum of how much to tip.  

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Figure 1:The $27.4 billion drone market today is expected to more than double to approximately $60 billion by 2026 with a compound annual growth rate (CAGR) of 16.3%.

Figure 2: One industry that has lagged others, yet is forecasted to grow the fastest in the near term: the delivery and logistics segment. It’s expected to experience a CAGR of 60% from 2021 to 2028.

Figure 3:In a recent Cushman & Wakefield survey of tenant preferences, it’s clear that big-box tenants—500,000+ square feet— prefer larger clear heights (36’ or higher).

Figure 4:Material Handling Exchange estimates that it would take approximately 80 people with handheld scanners and forklifts three days to complete a typical stock count for an average size uniform warehouse. One drone can complete the same job in two days, on its own and without forklifts.

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