Could vertical farms help fill unwanted office space?
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Could vertical farms help fill unwanted office space?
Vertical farming, a type of indoor agriculture where crops are grown stacked in layers, has been expanding in fits and starts since the late 1990s. As the technology has improved, more large-scale vertical farms are selling produce to large retailers, like Walmart and Kroger.
The global vertical farming industry is expected to grow to $9.7 billion by 2026, from $3.1 billion in 2021. Although a lot of attention is on these larger operations that are set up in factory spaces, many smaller vertical farms are tucked away in communities across the country.
That growth in local communities has presented an opportunity for landlords stuck with a surplus of unrented commercial space.
Empty offices are not a new problem for landlords, since the COVID-19 pandemic spurred a move to remote work across many industries. The national office vacancy rate hit 19.2% last summer, and $1.4 trillion in commercial real estate debt is looming.
Many ideas about how to fill office vacancies have been proposed, including renovating the units into housing. But as many developers have found, these housing conversions can be complicated and costly. Some are eyeing vertical farms as another solution, including D.C.-based real estate developer Brian Friedman who says they can rent less desirable units to these farms.
“It doesn’t have to take your top floor, it can take your basement floor, your terrace, they can take the spaces that are hard to rent, they don’t need to be in the good spaces,” Friedman said. And the farms don’t require the same level of improvements as a housing conversion.
Smaller vertical farms across the country, like Area 2 Farms in Arlington, Virginia, are able to fund their operations through the community-supported agriculture model, where customers get shares of locally grown vegetables on a regular basis.
Joya Patel, who lives just a few miles away from Area 2, gets a farm bundle every week. Unlike the vegetables from most grocery stores, Patel knows who grows her produce and frequently stops by to talk to the farmers. This connection to the farm is a selling point for her, like many other Area 2 customers.
Area 2 cultivates enough food to deliver to 400 families a week. The rows of greens and herbs in the cavernous space are a stark difference from the surrounding auto body shops on the block.
LED grow lights from the towers of stacked produce crates cast the room in a purple glow. These apparatuses, named Silo, were created by Area 2 co-founder Tyler Baras. After working in agriculture for a decade, including growing butterhead lettuce for Whole Foods, Baras pivoted to tinkering with farming contraptions in his backyard.
Standing nearly 15 feet tall, the machine uses a hydraulics-powered conveyor belt system to rotate the crates of plants from bottom to top every two hours. It only takes a handful of people to operate.
“We’re pretty much giving them their best day possible by moving them through curated temperature zones so they have their nice cold night, they slowly warm up for their breakfast, where they receive a nice organic molasses fertilizer,” Baras said.
Area 2 built up a local following in its nearly two years of operation, delivering produce to households within a 10-mile radius. Their climate-controlled farm allows them to sell fresh produce like tomatoes and herbs during all seasons, including in the dead of winter.
Alongside the staples like lettuce and carrots, they grow plants that belong in Willy Wonka’s farm, including herbs that taste like candy and blue cheese. Baras said these unique crops that you can’t get at the grocery store help Area 2 stand out from other farms.
“When you know your farmer you can get hooked up with mushroom plants and cheese leaves and taste plants that taste like Sour Patch Kids,” Baras said.
Before they started growing whimsical produce in their warehouse space, convincing landlords to rent to them was difficult. Many were hesitant about the profitability of a vertical farm, but plagued with an oversupply of commercial real estate, developers and renters are now eager for Area 2 to move into their properties.
“People are interested in having a farm, it’s super exciting,” Baras said.
Along with renting out units to vertical farms for commercial purposes, landlords are bringing them into their mixed-use spaces as a tenant amenity, similar to gyms and doggy daycares, Baras said. Kristof Grina, who co-founded rooftop farming and urban agriculture consulting company, Up Top Acres in D.C., said he is seeing this trend among clients.
“There is a value that can be measured in the tenant amenity that’s brought on by having a vertical farm in your office building, and the tenants that are there now have access to purchase produce directly from the farm on their way out of the office every day,” Grina said.
Typically, vertical farms sell produce at higher price points compared to fruits and vegetables purchased at the grocery store. For example, a weekly farm bundle from Area 2 goes for $40.
Wylie Goodman, a senior economic development planner for the Berkshire Regional Planning Commission in Massachusetts, said vertical farms in commercial spaces need to grow more expensive produce for a quicker return on investment to offset high upfront costs.
“It’s mostly high-value produce, such as lettuce and herbs, strawberries,” Goodman said.
One challenge to vertical farms moving into office and residential buildings comes from local zoning bylaws.
That’s why, across the country, some cities, including Boston and Cleveland are amending their zoning bylaws to support urban farming. Still, these changes depend on the type of agriculture and the resources available, said Alfonso Morales, a professor at the University of Wisconsin’s Department of Planning and Landscape Architecture.
“They’re [cities] going to vary in the process by which people can start a farm, and the complexities, the number of permits, or licenses to pull,” Morales said.
In addition to zoning bylaws, vertical farms also require HVAC and airflow improvements, as well as piping installation, which are all additional expenses. But they are still typically cheaper compared to office-to-apartment conversions.
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