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Amazon’s Staten Island Distribution Center Highlights Outer Borough Industrial Boom

The Verrazano-Narrows Bridge in New York City, connecting the boroughs of Brooklyn and Staten Island

Staten Island, New York City’s oft-forgotten fifth borough, has a new resident.

Amazon will occupy 855K SF at Matrix Development Group’s 3.5M SF logistics park on the West Shore of the island. South of the Goethals Bridge and near the Staten Island Expressway, the facility will offer direct access to fulfillment centers located in New Jersey, Brooklyn and Queens. 

The decision to open a distribution center in Staten Island, Amazon’s first within city limits, comes as e-commerce players turn to the outer boroughs to build last-mile facilities. The outer boroughs offer a unique opportunity for the repurposing of older buildings and for the development of new industrial facilities. Developers are drawn to service larger populations and to more developable space — Brooklyn and Queens have a combined population of 5 million people, compared with Manhattan’s 1.6 million. 

“Brooklyn and Queens' growing populations represent a tremendous demand for quick delivery services,” Marcus & Millichap broker Jakub Nowak said. “As a result, e-commerce players have been repurposing older buildings and  developing new delivery space in the outer boroughs.”

Room to grow

Nowak specializes in commercial and industrial property in the New York area. He has seen industrial availability in the city shrink as older properties are repurposed for office, hotel or multifamily uses. Historically low vacancy rates for urban industrial space have become a reality as a result of swaths of the city’s industrial inventory being repurposed and as distribution centers grow in size and number to accommodate the burgeoning last-mile delivery sector.

Because of this growing demand, developable land large enough to accommodate today’s fulfillment centers has become a hot commodity. 

“Staten Island is one of the few places where you can find a large enough footprint to accommodate for a distribution center the size of Amazon’s new facility,” Nowak said. “Ground-up development has been rare in general in the industrial space, but with an ongoing shift from traditional retail toward e-commerce, it's going to become increasingly popular.”

South of the future Amazon site, another two industrial sites hit the market last month. The sites collectively span roughly 1.1M SF across two sets of parcels at 4482 Arthur Kill Road and 742 Sharrotts Road in the West Shore-Charleston neighborhood.

In Brooklyn and the Bronx, the shrinking availability of space has led industrial developers to build up rather than out. Establishing last-mile facilities in the city itself has led to the development of multistory warehouses for the first time in decades, Nowak said. 

Last year, DH Property Holdings partnered with Goldman Sachs to develop a three-story, 370K SF warehouse in the Red Hook neighborhood in Brooklyn. When completed, it will be the tallest e-commerce distribution center on the East Coast and will feature 30-foot truck courts on the first two levels, as well as 28-foot ceilings, 33 loading doors and an attached parking deck.

Low supply and rising rent growth have justified ground-up development where land is available. Nowak has seen local industrial space fetch rents north of $30/SF for 50K to 100K SF footprints.

Marcus & Millichap broker Jakub Nowak


On the tenant side, locations in parts of the outer boroughs could be more cost-effective than locations in New Jersey near Manhattan. As industrial inventory in NYC declines, industrial tenants head to nearby New Jersey submarkets, causing rents to rise. The average asking rent rose 7.8% in Q1 to $8.20/SF as demand for space remains high, according to a Marcus & Millichap report. 

Staten Island industrial rent offers a middle ground. The average asking rent for industrial property across the borough was $14.41/SF in Q4, according to an NAI report

“The areas that are close to Manhattan and near the ports in New Jersey are relatively expensive,” Nowak said. “Staten Island, in particular, and where Amazon is building this new center, does represent a discount in comparison to New York and even parts of New Jersey because it is not near the waterfront.”

Last-mile development, at its core, is about reaching consumers faster. Staten Island’s strategic location offers a direct way to reach the outer boroughs, without having to go through Manhattan, while also retaining access to the major highways in New Jersey.

The Amazon distribution center will help create a hub, connecting large facilities to the smaller, last-mile fulfillment centers in the urban core, Nowak said. Amazon’s move to the forgotten borough echoes the same patterns seen among its competitors: Industrial development is headed back to the city.

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