Ware Malcomb’s multistory design concept, which is already being implemented in major urban markets across North America

The Next Evolution of E-Commerce Fulfillment Centers

Carrie Rossenfeld Industrial

Many industrial experts believe that multistory industrial buildings are the future of the sector. Like in other property sectors, going vertical with industrial buildings allows for greater capacity without a larger footprint—essential in a market where inventory and the land to build it on is in short supply.

While experts agree that this change is necessary and inevitable, the concept has been slow to catch on in the US, particularly in Southern California, for a variety of reasons. As Kurt Strasmann, CBRE’s executive managing director of Orange County and Inland Empire operations and Southern California functional industrial & logistics-market leader, recently told SoCal Real Estate,, “Will we ever go to multistory industrial? I think we eventually will, but it’s still cost prohibitive. There are height limitations on buildings, depending on where they’re located. Prologis is first developer in the west doing multistory, and this is in Seattle and the Bay Area.”

Design firm Ware Malcomb has developed an innovative multistory industrial building design prototype to meet the changing needs of ecommerce and help solve the challenge of last-mile delivery. The firm has begun implementing the design in the market, including in a three-story ecommerce distribution center totaling approximately 375,000 square feet in the Red Hook section of Brooklyn, New York. Hollister Construction Services is serving as design builder for this state-of-the-art facility developed by a partnership of DH Property Holdings and Goldman Sachs Asset Management. Once complete, it will be the first facility of its kind on the East Coast.

We spoke with Ware Malcomb EVP Jay Todisco about the firm’s innovative design concept, the unique aspects of designing a multistory industrial building and how the concept is likely to progress.

Jay Todisco | Images courtesy Ware Malcomb

SoCal Real Estate: What are the unique aspects of designing a multistory industrial building?
Todisco:
Multistory industrial buildings must be designed to maximize leasable area while accommodating circulation for full-size tractor trailers and parking for hundreds of employee vehicles. Each site presents a different set of design challenges. In urban centers with higher land costs and limited truck access, buildings need to be more than two or three stories tall and utilize high-speed freight elevators in order to deliver the necessary return on investment.

Why has this concept taken longer to catch on in the US than in other markets?
Multistory industrial buildings are more common in markets that have long been faced with development constraints, such as Asia. These concepts were born out of necessity to address the challenges of limited land availability and high land cost. As the US market begins to face these same challenges, the rapid growth of e-commerce and the demand for last-mile delivery networks has amplified the need for multistory facilities here.

Which geographical locations are likely to utilize these designs first?
These multistory industrial buildings are designed to be built in highly urbanized population centers near international seaports. Ware Malcomb has designed several of these facilities in major markets across North America, with several projects in the final design and engineering stages in Brooklyn and other boroughs of New York.

What else should our readers know about multistory industrial building designs?
Multistory industrial buildings are the next evolution of fulfillment centers in response to the booming e-commerce industry. They are not a commercial real estate trend, but a response to the cultural phenomenon in the way consumers will buy products for decades to come. These facilities are being designed for tenants across all retail industries, not just the dominant e-commerce giants. Ultimately, the key measure of the success of this new product type will be its complete acceptance by the capital markets. It must be viewed as an uncompromised institutional-grade building that will create long-term real estate value and fill the growing need for leasable space in the most highly sought-after and land-constrained locations.