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Demand for Industrial – Multi-Story Industrial, That Is

Mention the words “large industrial property,” and the image that comes to mind is of a sprawling facility that takes up an acre or so, including plenty of parking. Then there is the multi-story industrial niche, which CBRE describes as “a niche subtype that comprises less than 1% of U.S. industrial facilities.”

While “niche,” this subsector is hot. According to the CBRE article, “Multi-Story Facility Growth Continues,” there’s a growing need for these facilities, thanks primarily to e-commerce growth. This has boosted demand for industrial buildings near high-density population centers, where land is scarce and expensive.

Defining “True Multi-Story”

CBRE defined the true multi-story building (TMS) as:

  • Offering multi-level loading, offering trucks access to floors via on-ramps
  • Built since 2018
  • Typically situated near population centers

Differing from multi-level buildings, MLs consist of a single story containing internal floors or mezzanine space

The article indicated that under the TMS definition, five existing facilities and six are under construction in the United States. Most existing facilities are close to leased up, while those under construction are speculative.

Where They Are, What They Cost

Perhaps unsurprisingly, New York has the highest inventory level, with 2.7 million square feet across four existing buildings. Four more are under construction, totaling 3.7 million square feet. The remaining TMS facilities are in Seattle and Chicago, with two on the drawing board in San Francisco. The first U.S. TMS – Prologis Georgetown Crossroads – came online in 2018.

Though rents vary by market, TMS and their ML counterparts tend to have higher rents because they’re more expensive to develop. They’re situated on high-cost land as well. Some of the lease deals might include rates for tenant parking. CBRE indicated that most of these buildings lease for between $30 and $40 per square foot, with the parking areas going for $10 to $25 per square foot.

The International View

The article explained that multi-story and multi-level facilities were first developed in Hong Kong and Singapore and expanded to other areas with dense populations and near ports of entry. While users include last-mile delivery, e-commerce, and 3PL companies, other tenants in these international TMS/MLs include retail distributors, utility service providers, and fleet storage operators.

For example:

  • Vilvoorde’s 107,600-square-foot facility in Belgium is used for parcels and fresh food
  • France’s 645,000-square-foot Gennevilliers Logistics Centre contains a furniture and home goods retailer
  • The 1.3 million-square-foot campus by FourParx in Germany is home to an aircraft manufacturer, furniture company, e-commerce retailer and an information/tech service provider
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About Amy Wolff Sorter

I love content. I love writing it, visualizing it, and manipulating it to fit into different formats. I have years of experience in working with content, both as creator and editor. The content I create and edit provides assistance with many goals, ranging from lead generation, to developing street cred through well-timed thought-leadership pieces. Content skills include, but aren't limited to, articles and blogs, e-mails, promotional collateral, infographics, e-books and white papers, website copy and more.

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