A relatively new industrial real estate sector is Multistory Warehouse Development. According to a recently released study by commercial brokerage firm JLL entitled “Multistory Warehouses and Their Towering Future,” 2023 marks the fifth anniversary of multistory development (urban logistics) market in the United States.
Internationally, multistory warehouse development is several decades old and was fueled in part by the lack of available land in most markets. The JLL report cited a host of major development projects as examples of this burgeoning sector, including a number in the New York metropolitan area including the four-story, 385,510-square-foot Red Hook Logistics Center (Phase 1) in Brooklyn (completion date 2024); the three story, 315,000-square-foot Bronx Logistics Center (completion date 2023); the four-story, 680,000-square-foot Borden Complex in Queens (completion date 2024); the three-story, 245,337-square-foot College Point Logistics Center in Queens (completion date 2024); the Terminal Logistics Center, a three-story, 300,000-square-foot facility in Queens (completion date 2023) and 807 Bank St. in Brooklyn, a 172,000-square-foot, two-story facility slated for completion this year.
The JLL report says the typical North American multistory warehouse facility ranges from two to five stories with 24-foot foot to 36-foot ceiling heights.
Add to the list a recent proposal in the Town of Goshen by developer RDM Group. The plan calls for the development of two, multi-story warehouses in the heart of the Food and Beverage corridor from Chester to Wawayanda off of Route 17M.
The plan calls for two buildings on greenfield sties with a total of approximately 65-foot ceiling heights each, which can be built as a two-story building or could house a user, such as a cold-storage firm that would have just one-story with the significantly higher ceiling height than normal warehouse-type buildings. Conor Eckert, Development Officer and Vice President of Business Attraction for The Orange County Partnership, said the project will consist of the construction of one building of approximately 165,000 square feet and another totaling approximately 175,000 square feet. The project, which is in the early stages of the approval process, will be a welcomed addition to the growing industrial corridor on Route 17M. "Allowing for taller buildings is the only way we attract cold storage food and beverage occupiers - these buildings are very costly to construct, in order to make them financially feasible, you need to be able to rack higher" said Conor Eckert.
Report author Leslie Lanne, vice chairman of JLL, says the multistory warehouse space is poised for growth in the years to come and added that the true urban logistics inventory, under construction and in the planned/proposed area of the pipeline, total 9.4 million square feet of additional last mile logistics space in New York City.
Lanne did note that there are some challenges that could impact the multistory market, including land availability, competition and zoning regulations.
“Many government bodies are operating with zoning laws that are outdated as they pertain to industrial real estate. Having a property zoned for its highest and best use is one of the core components of the land entitlement process. Given that this process is lengthy and complex, getting the appropriate zoning for a unique building such as a multistory warehouse in a core urban market can significantly set back the development timeline,” Lanne stated in the report. “Furthermore, many local municipalities are facing growing opposition from residents who want moratoriums on any new industrial development in their neighborhoods. Consumers want their packages on the same day but don’t want the buildings that house those goods in their backyard.”
