Prologis Sees Anti-Warehouse Pushback From Communities

Throughout the pandemic and after — as consumers wanted more goods delivered, ecommerce expanded rapidly, and supply chains thrashed in spasm — more warehouses were necessary. There was a common implicit assumption that there would be enough space, materials, labor, and also community acceptance to continue establishing new buildings as needed.

But there are signs that logistics construction is facing resistance. There are common CRE issues like labor and materials costs and finding available locations. Getting though provisioning and managing financing costs. Then there are communities that don’t want a warehouse.

“It’s just getting harder to build warehouses,” said Prologis President Dan Letter on November 13 in the company’s first investor day in four years, according to a report in FreightWaves. “People want their stuff. They want it faster. They want it cleaner. But they don’t want these warehouses in their communities.”

Given the strong financial performance of the company, a focus on the topic might seem odd, but CEO Hamid Moghadam explained his philosophical position. “We have a special responsibility in this industry,” he said at the same event. “We’re by far the largest company in the space. We go very early in the process, so we set the tone in discussion.”

Speaking of what he called the “anti-warehouse sentiment,” Letter said, “Going forward, you’re going to have to have more resources. You need to have more patience. More know-how to execute in our space. And what this is going to lead to is customers just having to pay the freight — no pun intended — to be in these locations they need.” He said they’ve seen customers pay more to get the locations they wanted. “It kind of breaks their pricing sensitivity models.”

It’s not the first time the issue of popular pushback has arisen. In 2022, California’s State Assembly passed a bill requiring new warehouses with footprints of at least 100,000 square feet in the Inland Empire to be built at least 1,000 feet away from residential properties or schools. A number of cities in the state passed temporary moratoriums on further warehouse construction that year.

In New Jersey this month, a proposed law would deliver funds to cities studying the impact of warehouse development, as NJ Advance Media reported. “With a limited supply of developable land in urban areas, warehouses have started spreading deeper into suburban and rural areas, raising objections from some residents and environmentalists about noise, traffic and pollution,” the publication wrote.

Postdoc fellow Heleen Buldeo Rai at the Université Gustave Eiffel published a study in May 2023 noting, “Urban warehouses allow retail and delivery companies to serve consumer populations faster. They are also a necessary condition for the transition to an urban logistics system that is efficient and sustainable. However, integrating urban warehouses into dense, mixed-use urban areas presents considerable challenges, particularly in coexistence with surrounding communities.”