There are a couple of competing trends taking place in the waterfront neighborhoods of Brooklyn, New York. Cargo at the Red Hook Container Terminal has grown in recent years, and the company renewed its lease with the Port Authority in 2018. Red Hook Terminals also signed a long-term lease with New York City to revitalize the dormant 65-acre South Brooklyn Marine Terminal.
Red Hook and nearby neighborhoods like Williamsburg have also seen an influx of high-earning millennials. Some real estate developers covet waterfront property to house the new arrivals.
But logistics interests and real estate interests converge on one point: that Red Hook is ideal for setting up e-commerce fulfillment centers to serve urban neighborhoods. With e-commerce companies racing to meet demand for same-day deliveries, fulfilling orders from New Jersey distribution centers will not do.
“If you’ve ever driven across Manhattan, you’ve realized that it’s not ever really a good idea to do,” said Jeff Milanaik, a principal in Bridge Development Partners.
Last year, the Chicago-based Bridge, along with the Dallas-based Banner Oak Capital and the Texas teachers’ pension fund, paid $255 million for the 18-acre Sunset Industrial Park, along the Gowanus Canal in Red Hook. Twenty older industrial buildings are being torn down, to be replaced by a new four-story 1.4 million-square-foot ramped facility that will enable delivery trucks to load and unload on each floor. The first two stories will have a height of 32 feet each, and the upper two stories will be 28 feet each, making the facility as tall as a 12-story building.
The facility’s “unprecedented design,” according to Milanaik, will make it “essentially, four separate, stacked distribution centers. This facility will offer users the ultimate last-mile access to New York City’s massive consumer base, including those in Williamsburg, Long Island City, and Manhattan.” The site is located five miles from the Verrazzano-Narrows Bridge, which connects Brooklyn with Staten Island, and, by extension, New Jersey, and within a one-hour drive of 13 million consumers.
“Inbound freight will come out of Port Elizabeth, dropped off at night, and sorted,” said Milanaik, to be distributed the next morning by smaller vehicles like vans and Ubers. Milanaik projects the facility will become operational in 2024.
UPS is also in the mix in Red Hook, with its $300 million purchase last year of a 12-acre parcel on the west side of the neighborhood. UPS chose Red Hook, according to Axel Carrion, a company spokesperson, because “access to highways is very important.” “Being close to the water is another point,” he added, “because it is an opportunity for us to be able to utilize the waterway to avoid a lot of the road traffic.”
These developments had their genesis before the coronavirus outbreak accelerated e-commerce growth, but Milanaik believes the trend will continue after the pandemic. COVID, he said, is “opening up this whole new customer base and there’s no reason for them to stop using it when the pandemic is over.”
