Multi-Level Industrial Warehouses

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As demand for real estate continues to grow the question of where to build out is an important one. Cities experiencing low vacancy rates must consider where new supply will stem from. With little space left in which to develop, the answer for new warehouses might be upwards.

In markets like Vancouver, where industrial land prices have increased along with residential prices, the idea of multi-level warehouses has always seemed to be a solution in the case of a major crisis. Although Calgary may not be in the same pricing bracket as markets like Vancouver, it is important that we understand how this growing trend could affect Calgary’s market.

Multi-story warehouses have become a hot new trend in markets like China, explained from a report from British-based TechNavio. Increased labour costs and technological advances have proven to be the major factors why China is beginning to invest in multi-storey warehouses. Companies like Amazon and JD.com are already implementing distribution centres where there are little-to-none human workers. In fact, Goodman Group, the second-largest logistics developer in China, began working on a 1,184 ,030 square foot multi-level warehouse in Shanghai in 2016. This multi-story trend, however, is taking place closer to home than you would think.

Last April, Prologis, the largest owner of industrial land globally, broke ground on an 85-foot-high multi-story facility in Seattle and says they plan to do more warehouses like this in the future. This 580,000 square foot project is taking place on a 13.5-acre site in the southern Seattle neighbourhood of Georgetown.

A crucial component of this trend is urbanization. Shanghai, Seattle, and Vancouver are all highly populated cities with relatively high land values. As rents skyrocket and vacancies continue to drop to all-time lows, multi-story warehouses seem like a logical choice.

As large-scale companies ponder the decision whether or not to build upwards in other cities, they will also have to consider their options. Calgary provides plenty of opportunity because businesses have the ability to develop warehouses over 1 million sq. ft. in size. Multi-level warehouses may not make sense for Calgary right now, but the city is in a situation where it can take advantage of a growing trend by understanding how it will affect our real estate market.

Blog created by Jordan LeBlanc. Connect with Jordan at jordanjleb@hotmail.com

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