Chicago Joins a Growing List of Multilevel Warehouse Markets

Another city is finding room for a multi-story warehouse: Chicago.

Last week, Logistics Property Company (LPC) broke ground on the city’s first multi-story warehouse. It is expected to be completed in summer 2024.

The development includes 1.2 million square feet of space across two floors and offers both rooftop parking and an adjacent five-story parking garage, according to a release. The 11.5-acre property sits immediately adjacent to the full four-way interchange at Division and Elston in Chicago’s near-north Goose Island neighborhood.

Trucks will access full 135-foot truck courts on both the ground and upper floors for direct loading. The ground floor will have a 36-foot clear height, 28 dock doors and two drive-in doors.

The second floor, which offers 53-foot tractor trailers separate up and down double-wide ramps, will feature 33-foot clear heights, 28 dock doors and two drive-in doors.

This announcement follows a slowly building trend as developers look to satisfy demand for warehousing that is booming from e-commerce.

New York Takes the Lead

Multi-story warehouses are under construction in the Bronx, Brooklyn and Queens. Recently, GlobeSt.com reported on how rents as high as $30 per square foot may be needed to amortize the cost of building industrial space vertically.

That’s just the start. There are currently six multistory logistics facilities in the NYC-tri state region totaling over 3 million square feet, according to JLL.

They have been developed by companies including Prologis, Triangle Equities, Turnbridge Equities, IPG, LBA/RXR, Wildflower and Bridge Development and tenants range from Amazon to food suppliers.

Over the next seven to 10 years, JLL said approximately 17 new multi-story developments will be delivered to the tri-state market totaling nearly 10 million square feet.

Leslie Lanne, managing director with JLL’s Northeast Industrial team, tells GlobeSt.com, “It is more than a trend in the urban core of New York City (and other densely populated cities), it is a necessity for the market due to the limited land availability and lack of industrially zoned sites. Developers have had to build multi-story to make economic sense of acquiring what land sites are available.

“The occupier pool understands that there are limited options in the urban core, and they are seeking better designed and more operationally efficient facilities that are embedded within the consumer base to support their operations.”

One Bonus: Taller Buildings Great for Signage

A recent report from Prologis said that “building vertically helps overcome the limits of property lot sizes” and that it can solve several problems related to land scarcity and high property prices to give developers and property owners the ability to maximize profit potential.

“This type of warehouse is ideal in larger cities where land is at a premium and consumers expect same- or next-day delivery with online purchases,” the firm said, citing that they can be good for marketing purposes “because a taller building is more visible among dozens of other structures. In this regard, the building itself stands as a giant platform for signs.”

Newmark: Developers ‘Stymied’ by Land Constraints

A recent Newmark report said that developers have rushed new construction to meet demand, “but they are stymied by land constraints, particularly in coastal markets. Centrally located infill sites that can facilitate last-mile logistics are both sought-after by tenants and in very short supply.

“The resulting unmet demand is setting the stage for rethinking traditional warehouse design for an urban setting” and multi-story industrial buildings” are one alternative.