Inventory accessibility is imperative to accommodate consumers’ continually compressed delivery timeframes. Moving warehouses closer to dense populations will help make shorter delivery times feasible.

There is still a cost issue with multi-story warehouses on more expensive real estate, but as Amazon and others raise the bar, others will be forced to follow or find another way to compete.

Honestly, this is really funny to me. When the garment district was in New York, like a thousand years ago, Manhattan was filled with multi-story warehouses, where trucks would ride the elevators up to different floors depending on what they were delivering. I remember visiting one of Macy’s, and lots of wholesaler ones with my father when we’d go on buying trips. There were always issues with it, not the least of which was the logistical challenge of getting orders out the actual door on the first floor. There is really nothing new here at all (besides more automation once you’re on the floor(s) I suppose). This is a math problem. If you can rent warehouse space in a suburban area for one-fourth of what you can rent it for mid-city, why wouldn’t you? Then your employees don’t have to worry about high-rent dwellings in the middle of the city. This math is how Sears decided to sell its iconic building in Chicago and move out to Hoffman Estates, and I think it’s going to… Read more »

Some of the challenges with multi-story facilities and the related history shared by other commenters are well noted.

That said, I’d argue that the present context is quite different, and that decades of building out instead of up has created a multitude of other issues that transcend “costs” as they appear on financial statements.

Using less land and traveling fewer miles should lead to lower costs, and there are other benefits to an approach like this, though it may not be appropriate for all types of retail or all contexts.

Vertical warehouses have been around for more than two decades in the retail food and foodservice business. They go hand in glove with product handling automation. While they’re not, strictly speaking, multistory warehouses in that each story doesn’t have a floor/ceiling, these facilities can be 100+ feet tall. I remember seeing the Gordon Food Service (GFS) facility in Grand Rapids about 25 years ago and being intrigued by the automated storage and retrieval system that put away pallet loads using robotics. C&S and McLane have had similar distribution centers operating for years.

If you can’t go horizontal go vertical. This has been true in cities for commercial and residential properties for some time. The same logic applies to warehouses when faced with the same lack or cost of properties. The “I want it now” mentality that is driving our society is not going away.

Shortening the time between order and delivery has a perceived value that is not going to go away. Locating its warehouses as close to the customer as it can allows Amazon to capitalize on our need for speed.

Interesting that this idea is considered news (emphasis on “new”). The idea of multistory distribution centers has been around for decades. Whether a new idea or not, however, maximizing urban space to bring more product closer to more people likely makes logistical sense. On the other hand, does it make sense for the people working minimum-wage jobs in those warehouses located in high-rent districts? Not so likely.

When I read the headline for this discussion, my first mental image was of a tall 3-dimensional space, with a smaller footprint that uses conveyors/robots to move items in and out of trailers and slots with great rapidity. Ron Margulis describes something similar in his comment here. But the video portrays a stack of separate flat warehouse spaces with loading doors on three levels and vehicle ramps that (to me) resemble those outside New York’s Port Authority bus terminal. More expensive to build, I’m sure, than the flat, sprawling, million-square-foot Target and Amazon distribution centers here on the outskirts of Tucson.

Putting the D.C. closer to (or within) an urban center may help shave minutes off home delivery times and worker commutes. It may add minutes to the access time of the big trucks. I presume the designers have run the numbers and are satisfied with the trade-off.

A century ago, when I first started working, we used 10 or 12 public warehouses across the country. This was 1970, and every warehouse was multistory. By the time I left that company, 12 years later, all the multistory warehouses were closed down and the sprawling one-story warehouses were the norm. It had a lot to do with the Interstate highways and the ease of the internal logistics.

Today, warehouse technology has changed and the number of stories has become less meaningful. The savings are on the ground and in the ability to deliver quickly.

I believe that, as many of the big players who have avoided urban locations will be forced to move to this more consolidated model. Just as they have had to modify their store approach to fit the smaller urban footprint, they will need to do the same with their distribution centers. This denser multiple level approach will allow them to compete in the approaching same-day battle.