Vertical Farms Expand as Demand for Year-Round Produce Grows

The Four Percent


A recently constructed 95,000-square-foot warehouse in Compton, Calif., ticks off all the boxes for the booming storage industry: 32-foot-high ceilings, a secure truck court and access to truck routes.

But it won’t be used for cargo or storage. Plenty Unlimited, an agricultural start-up, is using the site for an indoor vertical farm, expected to open later this year.

“It’s the ability to put production anywhere without considering climate,” said Arama Kukutai, the company’s chief executive. The lease terms were not disclosed. Vacancy rates in the area are about 0.6 percent, according to Kidder Mathews, a commercial real estate firm on the West Coast.

Plenty Unlimited supplies Albertsons grocery stores with lettuce varieties grown on a smaller-scale farm outside San Francisco. Walmart, an investor, will soon sell Plenty’s produce throughout California. And Plenty has aspirations beyond greens: Last month, it announced plans with Driscoll’s, a berry seller, to develop an indoor farm in the Northeast devoted to strawberries.

Scientists caution that technology has limitations, with LED lights, sensors and operating systems adding to utility costs. “They don’t want to be warehouses, they want to be food production facilities,” Professor Giacomelli said. “And food production facilities have never had this kind of money.”

The money is creating demand for warehouse space. Kalera, a vertical farm company based in Orlando, Fla., harvests greens and culinary herbs there and in Houston and Atlanta. Farms in Denver, Seattle, Honolulu and St. Paul are opening later this year, and one in Columbus, Ohio, is planned for 2023. Farms are also open in Munich and Kuwait.

Details are hard to come by because the farms closely guard their intellectual property, growing system designs, material and structures.

The basic requirements for vertical farm warehouses include access to major highways, a one-day drive to major population centers and an educated work force that understands automation and plant science.

“The factory for leafy greens and micro greens production is similar to a semiconductor factory providing a controlled environment to predictably manufacture on an automated basis its products,” Mr. de Jong said in an email.

Plants are stacked in vertical rows reaching heights of 30 feet or more, said Neil Mattson, a horticulture professor at Cornell. Additional space is reserved for aisles, harvesting and packing, but there are no common metrics or industry standard.

One example of how controlled-environment agriculture is transforming industrial space is evolving in Pennsylvania, which serves markets from Boston to Richmond, Va.

Bowery Farming, which is based in Manhattan, is outfitting a 150,000-square-foot farm on the site of a former steel plant in Bethlehem, Pa., that is scheduled to open in May.

Bowery also has three farms in Kearny, N.J., two of which are for research and development. The third is a commercial operation serving grocers and e-commerce companies in the Northeast. Another facility, in Nottingham, Md., runs on hydroelectric energy. And the company has announced plans to expand near Atlanta and in the Dallas-Fort Worth area.

“It’s all about speed to market,” said Hans Tung, a managing partner at GGV Capital, formerly Granite Global Ventures, an investor in Bowery Farming.

Further west, in Selinsgrove, is a 280,000-square-foot greenhouse that belongs to BrightFarms. That company has begun developing five new greenhouses that will be 10 times that size, said Steve Platt, the chief executive of BrightFarms.

Reaching a scale that will be sustainable for businesses may mean expanding the types of crops grown in vertical systems, from leafy greens to vine and fruiting crops, said Russell Redding, the Pennsylvania agriculture secretary. For example, Bowery Farming announced plans to distribute strawberries in limited release in New York.

But some scientists have doubts about the industry’s ability to scale and diversify given the limitations of current technology. Tomatoes take 60 percent more electricity to grow than lettuce, and strawberries take twice that amount, said Bruce Bugbee, director of the Crop Physiology Laboratory of Utah State University in Logan.

“LED lights are about 70 percent, close to their theoretical maximum” of efficiency, he said. The consumer is paying for the energy costs.

Morgan Pattison, president of Solid State Lighting Services in Johnson, Tenn., and an adviser to the Department of Energy, was more blunt. “LED’s are not going to go down much more” in cost, he said. “Where investors are going against physics, they are going to have a hard time.”


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