A city plan to make it harder to build package-delivery hubs would cost New York jobs and tax revenue, while pushing the growing industry to New Jersey, according to an analysis by the Real Estate Board of New York. REBNY is preparing to mobilize against the proposal.
The plan, released last month by Mayor Eric Adams’ administration at the urging of the City Council, would require developers to get a special permit to open large-scale “last-mile” warehouses — which have proliferated in recent years and stoked local pushback for worsening traffic and air pollution. But a REBNY-commissioned study by the planning firm HR&A Advisors, which was shared with Crain’s, argues that the proposal would worsen the problems it seeks to solve.
Deterring developers from building warehouses in the city would shift that activity to Northern New Jersey, where much recent last-mile development has been concentrated. The result would be longer drives: compared to a warehouse in Maspeth, Queens, home to many existing warehouses, a New Jersey-based facility would require some 36,000 additional truck trips and 8 million more vehicle miles traveled per year to deliver goods into the city, the report found.
“Packages will get sorted in New Jersey, they’ll have to be loaded onto much larger trucks because they’ll have to service a much broader geography within the New York City market, and then you have bigger trucks rolling in,” said Basha Gerhards, REBNY’s senior vice president for planning, in an interview.
The City Planning department will hold a Tuesday hearing on the proposal, which will shape the final plan before it starts a monthslong public review later this year. Gerhards suggested REBNY was open to regulating warehouses through a less onerous process like a City Planning certification, but said her organization will oppose the plan if it advances in its current form — which would require a time-consuming special permit application, including final signoff by the City Council, to build any delivery facility larger than 50,000 square feet or within 500 feet of a residential district.
The permit idea has been pushed by lawmakers from outer-borough districts laden with warehouses; Mayor Eric Adams’ administration agreed last year to advance the regulation in exchange for securing lawmakers’ votes for the City of Yes for Economic Opportunity plan that loosened zoning rules for businesses. City Planning department spokesman Joe Marvilli said the agency would review the REBNY report “and consider its findings as we continue to shape this policy.”
“In kicking off the review process on this zoning change application, we carefully studied the landscape of logistics across the city and delivered on an important commitment to the City Council,” Marvilli said. “Now, as we shape this proposal, we welcome the opportunity for further input from New Yorkers during the environmental scoping and public review processes.”
REBNY has not always concerned itself with industrial policy, but its interest in the last-mile debate comes as the trade group, like other policymakers, is deepening its involvement in the city’s shrinking but job-rich industrial sector. The organization recently formed an industrial committee that includes warehouse owners as well as brokers who work on warehouse leases. And RXR Realty, a longtime REBNY member, owns multiple logistics centers and is planning another complex in Red Hook.
Both REBNY’s report and a separate city-commissioned study acknowledge that the permit might have a limited impact on new warehouse construction: That pace has slowed after a spike in e-commerce fueled a building boom during the pandemic, and there are only a few remaining vacant sites big enough to accommodate large warehouses. The City Planning department projected that the permit process would reduce the number of new last-mile warehouses opening by 2035 from 10 to 7.
But REBNY points to another risk: that the special permit will discourage owners from renovating the roughly 50 package-delivery warehouses that already exist around the city. That could jeopardize upgrades such as equipping an out-of-date warehouse to service electric vehicles, or reorienting their layout to reduce jammed parking lots, Gerhards said.
“What we’ve heard over and over again is because this is a ‘use’ special permit, it will apply to enlargements, to changes of use,” she said.
REBNY’s report points to other risks, including a hit to the city budget: in the last two fiscal years, the 10 most recently built last-mile facilities generated about $8.4 million more in property taxes than the same sites would have under their previous uses, according to the analysis. The warehouses also provide jobs, particularly to New Yorkers without college degrees.
Gerhards argued that the last-mile rule would be “at cross-purposes” with other key efforts by the Adams administration. City of Yes for Economic Opportunity sought to boost the industrial sector by letting some manufacturing businesses open in residential and commercial zones, and the Adams administration is preparing an “industrial action plan” premised on the idea that industrial businesses need help dealing with rising costs.
Critics of the last-mile plan point warily to the city’s last attempt to impose special permits on a specific industry: the 2021 zoning text amendment to new hotels. That law, widely seen as a favor by outgoing Mayor Bill de Blasio to a powerful hotel workers’ union, has effectively halted the construction of new hotels in the city.
