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$500 Million Warehouse Real Estate Project In The Bronx Underway
The building of a 700,000-square-foot two-story distribution center in the Bronx is planned for completion in 2020. This property development deal was voted as one of the top ten real estate transactions in NYC. Innovo Property Group and Square Mile Capital Management purchased the property from Extel Development for about $75 million. The budget for the project is likely to range from $300 million to $500 million, the construction on the two-level building alone will cost an added $150 million.
As of late a scattering of warehouses are popping up and being developed to meet projected growth in demand for distribution, storage and logistics spaces for the burgeoning of e-commerce businesses. Warehouse tenants across the country are seeking locations conveniently located to population centers to wrap-up the tail end of the shipment as the demand for quick delivery increases and where they can get the property license necessary for their warehouses.
There is a shortage of such warehouses, developed to tailor to the needs of the e-commerce sector, according to developers, Innovo among them. Tenants are willing to pay for the updated warehouse in lieu of the older, less tailored warehouse.
This project is one of an assortment being designed with multiple levels, taking advantage of upward expansion. Normally warehouse tends to be expansive, and ground-level only to meet the needs of deliveries and uncomplicated loading. Each floor of the two-story Innovo development project will be about 350,000-square-feet respectively with ceilings reaching almost 30-feet. Trucks will gain access to the second floor via large ramps. Innovo Property Group founder, Andrew Chung, emphasizes this is no easy task, but a complicated affair ensuring ease of access and quick delivery for the large vehicles to get to the second floor. Chung elaborated, “If a truck breaks down, you can’t have it blocking the ramp. There are a lot of considerations plus a lot of structural elements to support the weight of all the vehicles.”
An added feature to the warehouse property situated on a site previously occupied by a movie theater is that it is surrounded by parking lots allowing for ample parking and circulation of vehicles. Combine that with the two-story aspect of the project and you begin to see just how much it all makes sense.
Chung is enthusiastic, saying “This is going to be one of the city’s trophy warehouse properties.” He projects that warehouse space will be a hot commodity. An increase in demand due to the fact that as retailers shift more and more of their sales to an online based platform, the need for large, accessible warehouses tailored to this particular sector will grow. He goes on, stating “Right now about 15% of retail sales are through e-commerce. It’s projected to be 40% in a few years.” The projected demand simply cannot be sustained with the current methods.
Strategically placing several warehouse spaces in key locations across the city provide for quicker delivery to various neighborhoods and city sectors. The warehouse being built in the Bronx provides just that, the ability to access several key neighborhoods – Queens, the East Side, Westchester, Upper Manhattan, and Long Island all from one location. In each of these locations and other, legal representation can be found for closing and securing real estate.
The cost of rent for the projected warehouse space isn’t currently being disclosed, but will most certainly run higher than the current average of $15-$20/sq ft.
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