What is Multi-storey Warehousing?

Most warehouses worldwide are built as ground-floor structures with several levels of storage racks within. They are designed in such a way that trucks and other vehicles can be loaded or unloaded without difficulty using Material Handling Equipment (MHE).

Such warehouses normally have floors at an elevation that facilitates the easy movement of warehouse MHE such as forklifts or pallet jacks in and out of the parked transport vehicles, at the same level.

Real estate value and transport facilities play an important role in the setting up of warehouses. They can be set up on a plot of land reasonably close to markets, depending on availability and cost.

Single-floor warehouses are still popular for these reasons though another type of warehouse – the multi-storey warehouse, is gradually catching up.

multi story warehouse

What is Multi-Storey Warehouse?

A multi-storey warehouse unlike a traditional warehouse consists of several floors above the ground floor serviced by ramps, freight lifts, or conveyor systems. Ramps allow small trucks to access the different floors for loading and unloading cargo. With access bays for loading and unloading of goods, each level can operate independently.

Multi-storey warehouses offer the perfect solution to space constraints and spiralling real-estate costs, especially in large cities. The vertical structure makes maximum use of floor space. Typically, each floor or storey will be about 10 meters high that may consist of several levels of racks or other arrangements for the storage of goods.

Most multi-storey warehouses are designed and constructed to suit specific customer requirements. Such vertical warehouses are more for meeting the demands of the urban market. E-commerce and its rapid growth are the primary reasons for the development of vertical logistics facilities in busy urban areas.

With rapid global industrialization, growth in trade, and the need to move finished as well as raw goods between locations, the demand for warehousing space has only increased. Today, customers demand same-day deliveries, and multi-storey warehouses located close to urban markets are considered the best way to achieve this objective, besides saving on transportation costs.

Benefits of Multi-storey Warehouses

Real Estate Cost

Since multi-storey warehouses are built vertically, there is less investment made on the actual land area. Besides the availability of real estate within cities and market centres, their high rates can deter most conventional logistics developers. Multi-storey warehouse developers have an edge here as their requirement of land is much less than what is required for single-floor, conventional warehouses.

Fast Delivery

Being closer to the markets means faster delivery to customers. Same-day deliveries can be achieved much more easily from multi-storey warehouses that are located close to markets. It is generally found that customers who are serviced from such multi-storey warehouses are more satisfied than those serviced from logistics facilities located in far-away suburban areas.

When customers are located in urban areas it makes sense to invest in a warehouse that is located closer to them.

Reduction in Traffic

Vertical warehouses can help reduce traffic considerably as they are located right near market centers. With efficient goods replenishment and delivery policies, the traffic between urban and suburban areas can be reduced.

It means fewer transport vehicles on these roads and therefore much less pollution. Costs associated with transport are also much less here.

Visibility and Advertising

Making use of opportunities to generate revenue is always on top of the list of organizations. Having a high-rise logistics facility in an urban area means more visibility.

At a time when prime advertising space is at a premium, strategically placed advertisements on multi-storey warehouses, that can be seen from far catches the attention of people more easily than those on floor level.

Some Drawbacks

Availability of Space

Finding the right place to construct a multi-storey warehouse can be a daunting task. With a higher density of population in urban areas and more buildings, it is difficult to find a space that can be leased or purchased for the purpose of warehousing. A suitable plot of land may be available, but then, rates can be prohibitively expensive.

Expensive to Set Up

Typically, constructing a vertical warehouse is costlier than building it horizontally. Several civic regulations have to be complied with during construction. Also, special materials have to be used in the construction for the strength of the vertical structure.

Overall, it means an increased cost of construction when compared with horizontal structures.

Civic Body Regulations

Civic regulations are usually stringent and can call for a significant increase in the cost of setting up a vertical warehouse and its ongoing maintenance. It mainly applies to fire-fighting equipment, its maintenance and other requirements, pollution control, water conservation, etc. It means that these costs will have to be passed on to the customer by way of increased rates.

Examples of Multi-storey Warehouses

IKEA has set up a multi-storey warehouse at Port de Gennevilliers near Paris. Besides using road transport, it transports merchandise to destinations in Paris and its suburbs by river freight over the river Seine.

Vertical warehouses of Amazon are currently work-in-progress across several US states. One of the biggest – a 5 storey warehouse, is in Clay, New York.

India’s merchandise imports for 2021-22 are valued at USD 610 billion while its exports stood at USD 40 billion. Such huge figures only underpin the need for more warehousing and logistics infrastructure. Where the population is concentrated in cities and real estate is at a premium, logistics developers need to think of investing in multi-storey warehouses.

Slow Progress

The snail’s pace of development of multi-storey warehouses may be attributed to the large investments required for the construction of such specialized infrastructure. Storage space is very limited in and near large cities. Finding the right location and the plot of land is a big challenge. The cost of real estate and infrastructure can be very steep in and around cities.

Each floor has to be constructed taking into account the weight of the heavy cargo that has to be supported by it. Seismic activity of the region is another factor. It calls for special construction techniques and building materials to counter earthquakes and prevent or reduce damages and losses. Special steel supports and beams are required on each floor. The entire facility has to be covered by special fire-fighting equipment and alarm system.

Freight lifts, ramps, and elevators take up an average of 25% of the floor space. This leaves only 75% of the warehouse space for the storage of goods. Storage rates are usually high in such warehouses but they offer customers the convenience of market proximity.

As cities get more congested, governments are levying more taxes and introducing laws that encourage investors to develop away from crowded areas. Logistics developers have to consider all these factors before they invest in multi-storey warehouses near market centres.

Current Scenario

Today, a multi-storey warehouse is considered something of a novelty in most countries, though places like Hong Kong, Singapore, Japan, South Korea, and China have had such warehouses catering to their huge logistics requirements for the last several years. These countries with dense populations and limited land space have been the pioneers in developing multi-storey warehouses. Some multi-storey warehouses in Hong Kong are 12 to 20 floors tall!

The past few years have seen North America, Europe, and Australia taking baby steps at developing large multi-storey warehouses. A booming post-pandemic global trade is all the more reason for logistics developers to tap into the limited real estate resources for setting up such vertical warehouses.

Those who made use of the opportunities earlier on invested in prime logistics space with ease of access to ports and market centres. Others were left to develop their facilities in suburban areas. Multi-storey warehouses near market centres offer the unique opportunity to meet customer demands while increasing a company’s revenue.

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Disclaimer: The authors’ views expressed in this article do not necessarily reflect the views of Marine Insight. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Marine Insight do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendations on any course of action to be followed by the reader.

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