RI seen as prime location for warehouse distribution

It's not just Amazon...

Rhode Island is seeing a boom in warehouse space development, with distribution facilities popping up across the state.

While Amazon has grabbed headlines for its plans to build a massive robotics-enabled fulfillment center in Johnston, small and medium-sized players are also in the game.

In West Greenwich, Coast to Coast Fulfillment Inc. just completed a $2 million expansion and now has 108,000 square feet of space with more than a dozen loading docks and several drive-in truck bays on its 20-acre campus off Route 102. A Massachusetts-based developer has proposed a 500,000-square-foot warehouse distribution facility in Warwick. And a Wisconsin-based firm plans to build a warehouse within an abandoned factory in Central Falls.

fulfillment services ri forklift
A man operates a forklift at Coast to Coast Fulfillment's warehouse and order processing facility in West Greenwich, RI.

These companies are flocking to a state that has "distinct logistical advantages as a distribution hub," said Coast to Coast co-founder Jeffrey Wyant.

"If one’s hub were based in Boston, there are far fewer people and wholesale businesses to the north, while if one is in Washington, D.C., that’s already at the far south end of the corridor. New York City is somewhat centrally located, but its costs of land, office space, housing, labor and other costs of living are much higher than Rhode Island," Wyant said.

Metro Providence is close to Boston and New York, but the cost of doing business is lower. The area is at the eye of a dense population cluster with high economic productivity. From Rhode Island, he said, 60 million households can be reached via one-day ground shipping.

The Ocean State has always had a geographical advantage when it comes to conducting commerce, according to Keith Kelly, Rhode Island president at Citizens Financial Group (CFG: NYSE). In an email, Kelly mentioned resources such as the Quonset Business Park where a $4 million rail yard expansion is expected to support additional industry and warehouses.

"One of Rhode Island’s natural advantages is its great location," Kelly said. "It is one of the things that makes Rhode Island a great place to live and work. It is also one of the reasons that Rhode Island has played a key role in the nation’s commerce since before the Industrial Revolution."

Growing footprints

Founded in 1999, Coast to Coast has taken on clients ranging from major retailers to pet treat sellers to entities who run flash promotions on "Good Morning America" and other major television shows.

During the Covid-19 pandemic, business grew at a rapid clip as people continued to order consumer goods online, the company said. With the addition, Coast to Coast expanded its capacity to do business by about 40%.

“We are happy to be able to do our part to satisfy pent-up consumer demand,” said Coast to Coast president Hermond Ghazarian in a news release. The company started in 1999 with a small facility, and expanded several times at the same location.

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As a third-party logistics firm, or 3PL, the fulfillment center handles everything — including database management, storage, and drop-shipping — for clients who manufacture a range of consumer goods. The facility also handles outbound business-to-business orders.

Coast to Coast will handle goods sold on Amazon if the seller has chosen “Fulfillment by Merchant” instead of “Fulfillment by Amazon.” However, the company will ship products to Amazon and other large retailers, if that's what the client wants, Wyant said.

Such 3PL firms are on the rise as businesses look to outsource distribution and warehousing, according to a recent post by CBRE Group Inc. (CBRE NYSE). Third-party logistics providers have doubled their leasing volume from last year for a 31% market share.

Coast to Coast might be a scrappy and strategic Rhode Island-based business with a growing niche. But it's not the only player in the world of warehousing, logistics and order fulfillment.

NorthPoint Development, a Kansas City firm, plans its own warehouse distribution facility on 47 acres on Airport Road in Warwick. The company refers to the 500,000-square-foot building as "I-95 Gateway."

CBRE is already marketing I-95 Gateway as “best-in-class high-bay warehouse space” for lease at “the premier distribution location for all of New England.” Up to 116 loading dock doors are planned, with four drive-in bays. NorthPoint will build to suit with spaces dividable at ±175,000 square feet. The building is expected to be ready in the fourth quarter of 2022, according to a brochure.

The brochure touts the facility’s geographic advantages, including access to high population density. Twelve million people live within a 100-mile radius of Warwick, with a median household income of $78,000, the document states. As for transport, Warwick has easy highway access, access to T.F. Green Airport, and is within one-day striking distance of major cities in New England, New York, and even New Jersey.

In Central Falls, Milwaukee-based Phoenix Investors LLC wants to build a warehouse within an abandoned light bulb factory that dominates a downtown crossroads in Central Falls, a densely-populated area that does not provide easy on-off highway access.

Phoenix proposes to construct a high-bay warehouse at the former Osram-Sylvania plant, which once employed hundreds of people. Phoenix would demolish a part of the building to create its facility, and also tear down surrounding buildings to create parking for trucks.

Phoenix principals Frank P. Crivello and Anthony I. Crivello did not respond to telephone messages and an email seeking comment on the business logic behind their Central Falls endeavor.

The logistics giant

Rhode Island has also attracted much larger players, most notably Amazon. The company plans a massive, 3.8 million square-foot fulfillment center in Johnston.

Amazon (NASDAQ:AMZN) just landed a 20-year tax break from the town, but it has yet to announce the date of its groundbreaking on 195 acres near Route 295.

An Amazon spokesperson declined to answer an inquiry on Monday about why the company chose Rhode Island.

“Amazon is constantly exploring new locations and weighing a variety of factors when deciding where to develop future sites to best serve customers. However, we have a policy of not commenting on our future roadmap and are not yet commenting on any specific operations plans in Rhode Island,” said Caitlin McLaughlin in an email.

Yet, Amazon has been steeply ramping its physical capacity since the pandemic began, CFO Brian Olsavsky told investors in a Q3 earnings call. The company is on track to double its fulfillment network over the two-year period since the pandemic began.

"September alone, we brought online more than 100 new buildings in the United States, including fulfillment centers, sort centers, and last-mile delivery stations," Olsavsky said. "For the year, we expect our 2021 footprint additions to exceed last year's build-out, which was also significant."