Red Hook: New York’s Last-Mile Distribution Solution

Dwindling industrial supply in New York City has put a strain on e-commerce players looking to grab coveted last-mile facilities. A crucial link to getting goods quickly to consumers, retailers are competing for space with developers capitalizing on warehouse conversions and the rezoning of manufacturing districts.

One Brooklyn neighborhood continues to offer warehouse space to satisfy the high demand for last-mile distribution: Red Hook. 

Red Hook has long been a center for industrial activity. Container cranes, Civil War era brick-and-concrete warehouses and freight ports dot the one-square-mile peninsula. An industrial landscape and waterfront views blend together with the familiar ingredients of a neighborhood on the rise. A growing population, new residential and office developments and large-scale retailers have added to the neighborhood’s popularity. 

A burgeoning tech and creative office sector, as well as a strong restaurant and cultural scene, will continue to bring both residents and workers to the area.  

Furniture giant IKEA and grocery chain Fairway both have a major presence in the area. A Tesla Motors showroom debuted last year on Van Brunt Street. Metalworking, furniture design and glassblowing businesses have cropped up in Red Hook, diversifying industrial activity within the manufacturing district. 

Post-Superstorm Sandy, reconstruction efforts have shifted to new construction, drawing both a growing workforce and resident population. The arrival of the NYC Ferry's South Brooklyn route, connecting Red Hook to Lower Manhattan and the rest of the Brooklyn waterfront, has fueled development in the area. 

For e-commerce companies looking for an urban location close to the city’s large customer base, Red Hook is one of the most desirable locations for them and their supporting suppliers and distributors. The neighborhood is one of the city’s 16 Industrial Business Zones, areas that provide tax incentives for industrial development and protect existing manufacturing districts. 

As New York City continues to attract millennials, Red Hook could be the solution needed in a retail landscape increasingly dominated by “one-click” shopping and instant gratification. Nearly 70% of millennials prefer to shop online rather than in-store. 

Brooklyn boasts the city’s largest population of millennials, at 660,000, according to the American Community Survey. Red Hook is an industrial location near this demanding customer base that can provide quick delivery when making buying decisions. According to census data, millions of people live within an hour drive of Red Hook, making the neighborhood a major distribution hub. 

Sitex Group paid $110M for several acres of warehouses in Red Hook last year with the intention of retaining the use of the properties for industrial purposes and for film and photography shoots. Unlike some investors who are acquiring similar properties to convert into offices or high-end residential, Sitex Group and other owners see the continued potential in Red Hook as an industrial center. 

Online retailers without distribution centers near this maturing group of consumers could be missing out on a substantial opportunity.