As vertical farming grows, a new real estate opportunity takes root
It’s a staple of rosy pictures of our urban future, often viewed as the farming equivalent of flying cars. But vertical farming, long considered a curiosity, is starting to take root now. And according to the executive of one growing company, that means expanding beyond its niche, which offers a string of related commercial real estate possibilities.
Speaking at the ULI Fall Meeting in Dallas last week, David Rosenberg, CEO of AeroFarms, spoke about the company’s technological approach to growing crops, which involves a team of engineers, data scientists, and biologists. The high-tech private agriculture company, which opened a 69,000-square-foot farm in a converted steel factory in Newark, New Jersey, earlier this year, grows greens using aquaponics: plants are raised in beds without soil, sun, or pesticides, counting on LED lights and a rigorously monitored system of pumps and HVAC units to grow. It currently counts Goldman Sachs and Prudential Financial as investors, has raised more than $70 million, and plans to open 25 farms over the next five years.
Developed over a decade, the company’s proprietary technologies, which utilizes automation and data analysis, produces results with just a fraction of the space used by traditional growing, and can constantly turn over new crops, regardless of the weather. The company is also betting that mushrooming urban populations, a desire to eat local, and worries about foodborne illness will make its system more and more attractive to consumers and investors. Executives also believe they have the necessary technological head start to be an industry leader.
“Many businesses in this space are going to go out of business,” says Rosenberg. “I’d say 90 percent in the next three years. There’s real complexity to our business that we’ve focused on. We have more than 100 people working for us, and most of them are electrical engineers, structural engineers, lighting engineers, biologists, and microbiologists.”
Since lighting and energy are the biggest cost for AeroFarms’s unconventional growing system, recent advances in LED tech have made the company’s crops of kale, arugula, and lettuce more cost-efficient. The company, which claims it offers 75 times higher productivity per square foot than the conventional model and 95 percent water, foresees even more gains as technology improves and costs drop.
That also means expansion, and as AeroFarms and other companies in the industry master the technology, it offers a new use for industrial and warehouse real estate. Right now, AeroFarms is seeking out sites with proximity to produce distribution hubs, looking for cheap land and warehouse space, as well as cheap energy; offsetting the cost of electricity with reduced transportation costs is are the core of the company’s sustainability pitch. AeroFarms is mainly concentrating on the northeast, and looking at a space in Buffalo, New York, due to nearby hyrdro-electric power. They’re also finalizing a deal for a space out west as well.
While the technology may not work for more energy-dense crops such as corn and potatoes, as it stands now, it offers a model for leafy greens that may help feed our expanding cities (just look at the concurrent rise in rooftop farming).
As AeroFarms looks to refine its next-generation take on agricultural technology, it also offers a new take on commercial real estate, combining a farm and warehouse in one large, urban facility. It just may give older industrial sites a chance for a greener future.
“We can deliver anything the plant wants, when it wants it, how it wants it and where it wants it,” Rosenberg told The New York Times.
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