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Urban Farming Takes Root in CRE

A new trend is taking root in commercial real estate that has the potential to positively impact millions across the globe: urban farming.

Most people associate urban farming with rooftop gardens. While these are proliferating in larger numbers, they are only a small part of the trend. Developers and landlords are increasingly seeking to be eco-friendly and provide greater amenities to their residents – whether they be apartment dwellers, office workers or restaurants seeking their own easily accessible farm-to-fork food chain.

Using hydroponic (the method of growing plants without soil using water solvent), aeroponic (the process of growing plants in an air or mist environment, originally designed by NASA) and aquaponic (ecosystems that support both plants and fish) technology and LED lighting systems, urban farming operations create controlled environments that can potentially boost food production massively while simultaneously reducing the negative ecological impacts of agriculture. Urban farms hold the power to insulate farming operations from the impacts of climate change, shifting weather patterns and/or drought.

Farming within controlled environments means that food producers no longer need arable soil, perfect weather or even sunlight.

If these methods are implemented, the potential impact on food production output is massive. One leading Japanese farming outfit reports that their Tokyo operation boasts a crop yield that is 50 to 100 times greater per square meter than that of a conventional farm thanks to year-round crop production under perfect conditions. This means that some crops that may only be harvested two to three times a year on a traditional farm could be harvested as much as ten times more often using an indoor vertical farming layout. Meanwhile, vertical stacking means that the potential food production output of any piece of land can be multiplied exponentially. Additionally, because indoor cropping operations utilize extensive data-driven precision in their operations, waste caused by human error is also significantly reduced.

Urban farming and indoor cropping operations don’t just hold a massive societal benefit – they offer an extremely eco-friendly solution to a number of critical ecological challenges.

By some estimates, 75 percent of our fresh water contamination is caused by agriculture, while 70 percent of fresh water usage goes to agriculture. Their patented aeroponic system of farming uses no sun or soil, relying instead on smart light, hydroponics, data, substrate, pest management and scaling systems to reap harvests.

Indoor cropping operations utilize drain water and recycle it using state-of-the-art evaporation systems. Root misting systems allow these operations to use 95 percent less water than a regular field farm. Indoor cropping can feed overpopulated cities while using less land and water. These systems also offer the benefit of greater oxygenation of the plants themselves, which results in fresher, better tasting produce.

Because these are controlled environments, indoor cropping operations don’t need to use pesticides or herbicides, solving for another ecological challenge. Instead of soil, plants are grown in re-usable cloth made from recycled plastic, and instead of sunlight, operations rely on specialized LED lighting systems. This also helps to reduce energy footprints.

Perhaps their greatest ecological benefit is in the reduction of food miles. On average, in the U.S., produce travels 1,500 miles from farm to plate. This, of course, impacts freshness as many foods lose nutrients and taste along the way, but it also has profoundly negative impacts in terms of greenhouse gas emissions. Urban farming operations eliminate the need for extensive distribution chains with the ability to grow crops close to the end consumer.

In dense urban markets, the rise of indoor cropping creates an opportunity for urban planners to reuse obsolete industrial buildings while reaping the benefits of reduced local reliance on traditional distribution chain and the need to import goods from far away. This means less strain on infrastructure, with fewer big rigs clogging local highways.

The indoor cropping movement is hardly monolithic. A range of technologies already exist and others are being created.

Some operations see an opportunity in rooftop farms. Though this concept is in its infancy, the rise of rooftop farming capabilities could potentially create new revenue streams for the owners of urban properties.

Smaller scale innovations like tower gardens (vertical aeroponic growing systems) allow room for growing as many as 20 plants in less than three square feet. At Chicago’s O’Hare Airport, 26 existing tower gardens are now providing lettuces, basil, cilantro, chives and other products for the dozens of airport-based restaurant operators on the premise, estimated to serve more than 10,000 people daily.

While any crop can be produced using indoor cropping methods, according to Agrilyst, the most common crops currently grown indoors are greens, microgreens, herbs, vine crops, some fruits, flowers and nursery crops. Less common, but on the rise, are tubers, mushrooms, hops, algae and commodity crops. Looking forward, most analysts don’t see the indoor cropping movement having a significant impact in the immediate future on often heavily-subsidized commodity crops like tobacco, wheat and corn. However, the impact on other vegetables, fruits and flowers is likely to be quite significant. From a real estate perspective, this trend has barely begun to move the needle in terms of vacancy levels or rents.

We expect indoor cropping operations to be a major growth industry in the years ahead.

Because the goods indoor cropping produces don’t have as long of a journey to the end user as traditional methods, transportation costs will be reduced and pricing for consumers will be impacted positively, especially as these operations build scale. Meanwhile, the positive ecological impact of urban farming will also make the method popular with eco-conscious consumers.

We expect urban farming and indoor cropping operators to be increasingly active in the market. Their impact will first be felt with obsolete industrial inventory. That said, the trend is not limited to industrial properties alone. From the perspective of adaptive reuse options, urban farming could play a role in the repositioning of any property type, and it is likely that both old manufacturing buildings and defunct shopping centers will be the first product types within the adaptive reuse category to see the affects. Eventually, as the trend of urban farming continues to flourish and further expand, there will be a tangible impact on the existing food supply and distribution chain. This won’t happen until cities become self-sufficient in terms of farming, and this process will take years if not decades – but it holds the promise of radical disruption.

This article was first featured in Cushman & Wakefield’s “The Edge: Volume One”. You can find the full magazine here.

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