Distributors in Japan, Singapore and other densely populated areas for years relied on multiple-story warehouses to store and ship their products despite tight real estate markets.
That trend, however, did not migrate across the ocean to the U.S., where massive one-story warehouses take advantage of plentiful land in the nation’s suburbs and rural areas.
But that’s about to change, according to The Wall Street Journal.
Prologis officials told the paper that the company will begin construction on a three-story warehouse in Seattle next year and open the 580,000-square-foot facility in 2018.
The warehouse will feature a second floor accessible by truck ramps and a third floor dedicated to lighter-scale operations and serviced by freight elevators. Seattle officials expect the project to create hundreds of jobs in the city.
It’s also unlikely to be the last multi-story facility in the U.S., where e-commerce puts increased pressure on retailers to get their products to customers faster.
Establishing warehouses in larger population centers makes that task easier, but building sufficiently large one-story facilities is becoming difficult due to low vacancy levels and rising rental rates.
Rents at Prologis’ Seattle facility could cost up to 50 percent more than space at a conventional warehouses, but tenants could make up that cost by cutting down the distance between their operations and their delivery destinations, analysts said.
Prologis also said it’s also looking at building multi-level warehouses in New York, Los Angeles and the Bay Area.
“The model has changed. You’re no longer just moving big volumes from one point to second point,” Hamid Moghadam, chief executive of the world’s largest warehouse owner, told the Journal.
