(Bloomberg)—A logistics company partly owned by Related Cos., the developer behind Manhattan’s Hudson Yards, is searching for locations across North America to build its multistory robotic warehouses.
Robots -- and humans -- started working this month at Quiet Logistics’ new 440,000-square-foot (41,000-square-meter) fulfillment center in the Los Angeles area. It’s the firm’s first property on West Coast, and a model for as many as seven more the company aims to build near population centers by 2022, with the goal of getting goods to consumers faster.
“Some people assume these large facilities should be in rural areas with more open space, but they work better in cities that are close to more people and more labor,” Chief Executive Officer Bruce Welty said in an interview.
Quiet Logistics -- which fulfills orders for fashion and lifestyle brands such as Bonobos, M. Gemi and Outdoor Voices -- is scouting locations in the U.S. Southwest, Midwest and Southeast and also exploring the possibility of building in Canada and Mexico. Multilevel construction uses less real estate than traditional sprawling, single-story warehouses, an advantage in urban areas where land is scarce and costly.
At the California center, in La Palma, robots designed by Quiet Logistics spinoff Locus Robotics will be able to travel long distances across the building and scale high shelves that are out of reach of humans. With the rise of same-day and next-day delivery options made popular by Amazon.com Inc., the automation is necessary to meet the expectations of the company’s fashion clients, who have large customer bases in the L.A. area, Welty said.
That doesn’t mean robots are taking over. In fact, the demand for fast fulfillment will require more human labor than ever before, according to Welty. Quiet Logistics aims to hire about 500 full-time employees who will work in tandem with the robots at the two-story La Palma center, the company’s fifth U.S. warehouse.
Related -- known for its $25 billion Hudson Yards project, with office and residential skyscrapers and a $2 billion mall -- in March teamed up with Greenfield Partners to buy Quiet Logistics, extending the developer’s reach into e-commerce. The soaring popularity of online shopping has helped make warehouses the best-performing segment of the property market this year, according to a Bloomberg index of real estate investment trusts.
But landlords should take caution before expanding aggressively into vertical fulfillment centers, according to David Egan, global head of industrial and logistics research at CBRE Group Inc. Because there are few such properties in existence, most of the savings and benefits are theoretical, he said.
“We don’t know what the economics look like,” Egan said. “We don’t know what the rents are going to be, and we don’t know what’s going to happen when the users’ lease runs out and the spaces have to be taken over by a second generation of renters.”
--With assistance from Patrick Clark.
To contact the reporter on this story: Sydney Price in New York at [email protected].
To contact the editors responsible for this story: Debarati Roy at [email protected]
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