Real Estate Roundup: Warehouse And Distribution Demand Soars, So Does Community Opposition

Real Estate Roundup is a weekly rundown of developments in the world of industrial real estate used for logistics and transportation. This week: Demand for industrial warehousing and distribution facilities is soaring, but communities frequently fight back against what they see as problems with noise, air pollution and traffic safety. Recent incidents in Florida, New York, Pennsylvania and California illustrate the situation. 

In the rush to expand warehouses and distribution facilities amid skyrocketing demand for online commerce, here's a bucket of cold water for eager developers and elected officials.

Homeowners and residents often don't want these facilities as their neighbors. The issue has popped up recently in Pennsylvania, Florida, California and western New York, to name just a few locations.

It's easy to see why homeowners fight back. Large warehousing facilities can be loud and, in some cases, operate around the clock. Large trucks can worsen traffic and damage local roads.

But as e-commerce surges, it's an issue likely to pop up more and more. The COVID-19 pandemic has changed consumer behavior, perhaps permanently. Demand has soared for warehouse space, especially in the last-mile delivery zone, according to Chris Roach, CEO of real estate firm BBG. Manufacturers and distributors are rapidly changing how they source materials, trying to lessen their dependence on Chinese production. Still, it will take time to make major changes to logistics and transportation routes, Roach said.

Meanwhile, homeowners remain vigilant about keeping big industrial parks out of their communities.

In late 2019, the Bethlehem, Pennsylvania, development company River Pointe Logistics Center bought 725 acres near Upper Mount Bethel Township, Pennsylvania, where it wants to build 13 manufacturing and distribution buildings, according to the Allentown Morning Call. The developer wants to lease the warehouses to businesses in the food and beverage, manufacturing, retail, automotive, distribution, and e-commerce sectors.

Residents complained that it would worsen traffic, air and noise pollution, and pose safety hazards to motorists. Despite the opposition, the township approved zoning changes in early September that will allow the development to move forward.

In Pompano Beach, Florida, developers want to build a warehouse and logistics center at the site of a horse racing and casino park. The company is redeveloping the entire site into an industrial park, taking advantage of its location near a CSX rail line, according to the Orlando Sentinel.

As soon as word of the plans became public, however, Cordish Cos., of Baltimore, found itself on the receiving end of complaints from residents. Elected officials in Florida are still considering the proposal.

Residents near Buffalo, New York, have succeeded (so far) in repelling a proposed $325 million Amazon distribution site. The center was slated to be about 3.8 million square feet, which critics said was too large for the neighborhoods in Grand Island, New York.

Trammell Crow, the commercial real estate firm representing Amazon, said in late September that it may try to revive the project in another part of the Buffalo area, according to Buffalo Business First.

Environmentalists also get involved. The Sierra Club and two other groups last year sued to block the development of a massive warehouse complex in Fontana, California, saying it would threaten air quality and nearby endangered species. The groups later reached a settlement with the developer after securing promises for some protective measures.

The issue is more than just another case of NIMBY (not in my back yard) syndrome. Many NIMBY disputes center around developments that ostensibly provide a greater public good, like bike trails or mass transit lines, that can provide a direct benefit to the protesting neighbors. It's much harder to see the benefit of a 24/7 warehouse site for a company you never buy products from.

Of course, public officials have ways to sell the developments to resistant citizens. They can point to the higher tax revenue the facilities will generate and the public benefits the extra revenue will buy. They can point to job creation.

Officials can also limit the impact of protests. They can locate warehouse facilities at the extreme edges of their jurisdictions. Think of an industrial park (or a landfill, a prison or another type of undesirable facility) that's situated literally on the border of another county; in such a location, the number of impacted property owners is reduced by half. Let the neighboring county worry about half of the protesters.

They can also pass regulations to limit the impact of logistics and transportation. The state of California this summer required ships and trucks to limit air pollution in the communities located near ports, according to the Times of San Diego. The state passed the measure despite opposition from the oil companies, engine manufacturers and ports officials who rely on the facilities.

Expect more of the same, possibly in your neighborhood, in the coming months and years.

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