There May Be a Better Use for Old Warehouses Than Housing

Real Estate

For a long time, it has been hip to turn old warehouses and factories into condos and apartments in many parts of the country.

With the housing crunch in many urban areas, like the outer boroughs of New York and northern New Jersey, these residential uses made perfect sense. But Ken Colao, a principal at CNY Group observer, has other ideas for these properties. 

Colao thinks they should be converted into inventory centers, which could go a long way in fixing the e-commerce problems, like the toilet paper shortage, that COVID-19 exposed.

“There is absolutely a need for centrally located fulfillment centers and distribution facilities, and we believe that some vacant warehouses can provide a good opportunity for that type of repositioning,” Colao says.

Even though these spaces wouldn’t be providing sorely needed shelter, they still could deliver societal benefits as warehouse space, according to Colao. Specifically, he sees an environmental benefit to these conversions. He thinks they can reduce traffic, congestion, air and noise pollution and use of resources. 

“Think about a sharp reduction in the number of large tractor trailers in the middle of the night traveling the city’s main thoroughfares and instead traveling to a regional distribution area,” Colao says. “This change in the structure would then allow smaller, perhaps electric vehicles to travel into the main areas of the city to feed the fulfillment centers.”

Over time, Colao thinks these fulfillment centers can become social places with amenities where one may dine or engage in another activity while picking up a delivery. Also, they can lessen costs, provide new amenities, and provide an upside to the overall economy. “Such centers can replace much of the wasted retail space now available,” he says. 

Colao envisions increasing mixed uses for the existing structures, incorporating spaces for social engagement and adding amenities on ground floors of large-scale developments to add to the center’s activity. “This can be achieved through repurposing existing properties and adding uses to new buildings in the city, as well as new facilities, in central locations throughout the outer boroughs and New Jersey,” he says.

While COVID shows the importance of fulfillment centers near urban areas, housing is still a need.

“At the end of the day, there is a need for both [housing and fulfillment centers],” Colao says. “I believe warehouses that can be easily repurposed into housing will be of higher and better use, especially in cases where repurposing a warehouse building might not be cost-effective, due to structural or other significant design-related issues.”

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