Why Are So Many Warehouses Coming to the Bronx?

By Published On: July 21, 20224.1 min read

Without a doubt, the white-hot warehouse market across the country is still raging. According to the Logistics Rent Index, published by global industrial REIT Prologis, land values in the U.S. rose by 50% in 2021.

So it makes sense that multi-story warehouses are helping offer much-needed space to urban tenants, as skyrocketing land prices are still climbing for industrial development.

Even though there are land constraints (forcing tenants to renew leases years in advance and raising warehouse roofs to deal with space shortages), more multi-story warehouses are being built in urban areas, namely in the borough of the Bronx in New York City.

Multi-story warehouses are being built in urban centers to be closer to their companies and their customers. James Breeze, Global Head of Industrial and Logistics Research with CBRE, who recently explained to Wealth Management that it saves time, naturally, to avoid shipping delays, and communication with delivery networks, who are under pressure to deliver within tight time windows, like same-day delivery.

Even with traffic congestion delaying deliveries, one of the biggest challenges is securing stable ramps for upper levels of multi-story warehouses to handle the weight of products and heavy steel tracking systems. It might work for vertical farming, but can be more complicated with heavier machinery, and automated, artificial intelligence monitoring systems.

Two workers look over a warehouse.

2505 Bruckner Boulevard – Design by KSS Architects | Image provided by Innovo Property Group

According to a recent report in Globe Street, multi-story warehouses are more expensive to build, roughly 40% higher per square foot than a traditional warehouse. It hikes up rents, too.

The Bronx is no stranger to warehouses since the e-commerce boom hit new heights during the height of the 2020 lockdown. The borough, which has a population of 1.4 million, has a dozen road connections to Manhattan, making quick deliveries easier than other boroughs (it’s 3.5 miles from midtown and 10 miles from downtown Manhattan, and could deliver products to customers in an hour — on a good day).

The strip along the Bronx River is already home to an Amazon distribution center, and an old cinema complex that closed in 2012 has become a last-mile facility, meaning that it’s a warehouse that is the last steppingstone before it arrives on a customer’s doorstep. Andrew Chung, CEO of Innovo Property Group, which is developing a warehouse project in the Bronx, told Supply Chain Dive it’s part of the distribution revolution. “You can’t deliver from New Jersey the same day,” he said.

The project is called the Bronx Logistics Center, which is located on the river in the Oak Point industrial area of the South Bronx, near 149th Street. It’s close to the Bruckner Expressway, making transport easier than warehouses in remote areas.

The Bronx is more attractive than warehouse spaces in rural New Jersey, for example, as they are sometimes too far from some New York City-based businesses. And, depending on where they are in New Jersey, the loud 28-wheeler trucks can disrupt some suburban areas at night, with deliveries being made around the clock.

That’s partly why The Bronx is the next up and coming hotspot for warehouses. The Bronx Logistics Center broke ground in 2021, and is expected to be completed in 2023. It will include a 585,000-square-foot warehouse, 500,000-square-foot parking garage and more. The property is part of the Port Morris Industrial Business Zone, as designated by the City of New York.

According to the project’s Architect Jim Wyatt, Vice President of ARCO Design/Build, they’re designing next-level perks, like second-floor truck street access in the warehouses that has two levels, two mezzanines and a truck ramp. The roof will have solar panels and chargers for electric vehicle parking.

A warehouse sits on a riverfront.

2505 Bruckner Boulevard – Design by KSS Architects | Image provided by Innovo Property Group

Meanwhile, 2505 Bruckner, just five miles away from the Bronx Logistics Center, is another new warehouse being built in The Bronx. It’s accessible within five highways and is currently under development with Innovo Property Group and Square Mile Capital, expected to be ready for occupancy before the end of the summer.

The first multi-story industrial project on the east coast is a three-story warehouse leased to Amazon in Red Hook, Brooklyn, in partnership with Goldman Sachs Asset Management.

New York is not alone, other cities are building warehouses in close proximity to urban centers, like Amazon’s new multi-story projects in Austin, Denver and Philadelphia, among others. Trammell Crow in Dallas is working on a five-story facility for Amazon in Syracuse, which is costing $350 million, as well. But while it may be convenient to have these urban warehouses, they’re not cheap.

“By their very nature, urban environments have limited land availability, thus, developers are constrained by the site geometry in designing an efficient building,” Alex Kachris, research manager with JLL, told Wealth Management. “This becomes increasingly difficult the smaller the site gets, largely due to the ramping to the upper levels.”

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