First U.S. Multi-Story Warehouse Coming To Seattle

Citing a need to build up instead of out due to diminishing available warehouse space, Prologis will begin construction on a three-story, 580,000-square foot Seattle facility next year and wrap up in 2018.

The world's largest warehouse owner plans to bring a new concept to the U.S. distribution market in coming years: the multi-level warehouse.

Officials from Prologis told The Wall Street Journal that construction on its three-story, 580,000-square-foot Seattle warehouse will begin next year and wrap up in 2018.

Multi-story warehouses are relatively common in Asia and Europe, where a relative lack of available real estate forced distributors to expand upward.

The pattern, however, didn't make its way to the U.S., where massive, one-story warehouses take advantage of plentiful land — often in suburban or rural areas.

The rapid growth of e-commerce, however, increased the pressure on retailers and shippers to get products to customers faster — which put a premium on warehouses located in large population centers with limited available space and skyrocketing rental rates.

“The only way the logistics sector can compete is with this more dense format," Prologis chief executive Hamid Moghadam told the Journal.

The new Prologis warehouse in Seattle will feature a second floor accessible by truck ramps and a third floor dedicated to lighter-scale operations and serviced by freight elevators. Seattle officials expect the project to create hundreds of jobs in the city.

Rental space at the new facility could be up to 50 percent more than rates at conventional warehouses, but analysts suggested that tenants could account for the added expense with savings on shipping costs.

Prologis also indicated that it will evaluate building multi-level warehouses in other U.S. metro areas with increasingly limited warehouse space, including New York, Los Angeles and the Bay Area.

More in Supply Chain