Amazon Goes Sky High With Multistory Warehouses: Now It's Really Raising The Roof

Since Amazon.com Inc. built its first multistory warehouse in Seattle five years ago, the concept of vertical logistics centers has taken off in the U.S.

Built by San Francisco-based Prologis Inc., Georgetown Crossroads is a three-story 590,000-square-foot warehouse that features truck ramps leading to loading docks on the second level and a third floor, served by forklift-accessible freight elevators, for lighter warehouse operations.

But long before that, Prologis and other logistics providers developed multistory warehouses in Asia and Europe, where space is tight and trucks are shorter.

A multistory warehouse is built vertically with truck ramps and docks located on multiple floors. Small trucks can navigate the ramps to upper floors, while the main loading dock accommodates the conventional 53-foot trailers typically used in the United States, according to Prologis, which has built multistory warehouses overseas for years.

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The tallest multistory warehouses — as many as 22 levels — are in Hong Kong. Although those are considered anomalies, it’s not uncommon to see multistory warehouses in China, Singapore or Japan standing at least five stories tall, according to a recent report from commercial real estate firm JLL.

Multistory warehouses have emerged as a market-driven response to the challenges posed by urbanization and the increasing prominence of e-commerce, which require expansive warehousing facilities close to urban centers. As the saying goes, "If you can't build out, you must build up."

In the past, multistory warehouses were just needed in the most expensive coastal cities, where land for building new facilities was limited. Even the largest warehouses topped out at 1 million square feet to 2 million square feet, CoStar Group Director of U.S. Industrial Analytics Adrian Ponsen told GlobeSt.com.

Amazon Leads U.S. In Building Multistory Warehouses

State	3+ Story Inventory	Under Construction	Proposed	Amazon's Share
Texas	14,516,419	416,000	–	90%
Colorado	9,150,000	–	–	86%
New York	4,830,147	1,095,287	2,778,800	32%
Tennessee	7,100,000	–	2,473,340	74%
California	5,991,229	1,058,373	8,072,678	44%
Georgia	6,862,467	–	3,200,000	93%
Virginia	6,400,000	–	6,498,265	75%
Oklahoma	5,249,602	–	–	100%
Iowa	2,680,000	2,471,350	–	100%
Oregon	–	3,850,000	–	100%
Total	62,779,864	11,891,010	23,023,083	74%

E-commerce is driving demand for multilevel warehouses in urban areas, which have the highest land prices and as a result, the highest rents. But making the development of warehouse space denser is the only way to increase the amount of functional space without snatching up land that could be used for residential or high-rent commercial development, according to a report from Colliers.  

"As a company with much to gain from innovating efficiencies in the supply chain, it makes logical sense that Amazon would be the company to create demand for multistory warehouse buildings," according to the Colliers report. "Not all companies will be able to justify the added cost to develop."

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