To speed up e-commerce delivery, Amazon and its competitors aim to stage more goods closer to population centers so the so-called last mile of shipment is more like one mile than 10.
But in dense, urban areas like Seattle, it can be tough to find a plot of land to accommodate a large warehouse, accessible by big rig trucks, even as demand grows with accelerating delivery speeds.
In South Seattle, Prologis built a multistory, truck-accessible warehouse that it describes as the first of its kind in the country. Now, less than a year after its completion, the 590,000-square-foot facility is fully leased with Amazon taking most of it.
Prologis, the San Francisco-based developer and owner of the Georgetown Crossroads facility, and other developers are looking to replicate the multistory model elsewhere in Seattle and in cities across the country as transportation and logistics networks evolve to meet the pace of deliveries Amazon has promised.
Earlier this year, Amazon said its standard delivery speed for its Prime customers, who pay $119 a year for shipping and media, would go from two days to one day. It also offers its speedier Prime Now service, delivering a selection of items in two hours or less in markets including Seattle, where it already operates smaller, dedicated warehouses. For those services to succeed, warehouses need to be close to customers.
“You can’t solve same-day delivery [in Seattle] by locating in Kent,” said Joe Blattner, president of Avenue 55, which is developing a four-story warehouse in South Seattle called Track 6.
The Kent Valley, with its miles and miles of single-story warehouses, had more than twice the available industrial space as Seattle in the second quarter, offered at half the rent, according to CBRE. There, too, vacancy rates are low.
“Throughout the region there is a lack of industrial-zoned land available for development, and Seattle is particularly scarce, resulting in innovations such as the multi-story industrial warehouse,” the commercial real estate firm said in a recent report.
At Georgetown Crossroads, on East Marginal Way South, two swooping concrete ramps allow semitrucks to reach loading doors on the second floor, nearly doubling the truck-accessible capacity of the facility compared with a typical single-level warehouse on the same amount of land. A third floor was marketed to be subdivided for light manufacturing, office or laboratory space.
Those heavily reinforced ramps and truck platforms drive up development costs. The facility cost more than twice per square foot what a single-story warehouse would, according to The Wall Street Journal, which first reported the Amazon lease Tuesday, quoting an unnamed source saying the commerce giant was taking 500,000 square feet and Home Depot was planning to lease nearly 100,000 square feet.
An Amazon spokesperson confirmed the company was leasing a portion of the project but declined to provide details. A Prologis spokesperson said the facility is fully leased.
Prologis purchased the 13.7-acre property, which was previously used to store shipping containers, in 2015 for $24.5 million. The property and improvements were appraised this year at $142.6 million, according to the King County Assessor’s office.
Blattner said Georgetown Crossroads is the only multistory warehouse in the Seattle area with truck access to a second level. And, he said, the expense of making upper floors accessible for trucks means it’s unlikely a similar project will come online in the near future — but that could change as consumers grow to expect increasingly compressed delivery times.
Prologis, which has dozens of multistory warehouses in Asia and Europe, is focusing more of its development in the U.S. on urban infill projects, partly in response to the continuing growth of e-commerce, which now accounts for about 10% of retail spending.