Vertical farms expand as the demand for products increases throughout the year

A recently constructed 95,000-square-foot warehouse in Compton, California ticks all the boxes for the burgeoning warehousing industry: 32-foot ceilings, a secure truck court and access to truck roads.

But it will not be used for shipping or storage. Plenty Unlimited, a farming startup, is using the site for an indoor vertical farm, expected to open later this year.

“It is the ability to put production anywhere without considering the climate,” said Arama Kokutay, CEO of the company. The terms of the lease were not disclosed. Vacancy rates in the area are about 0.6 percent, according to Kidder Matthews, a West Coast commercial real estate firm.

Plenty Unlimited supplies Albertsons Grocery Stores with lettuce grown on a small farm outside of San Francisco. Walmart, an investor, will soon sell Plenty products across 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 dedicated to strawberries.

As supply chain disruptions continue to slow distribution, consumers adopt healthy eating habits and climate change is expected to affect crop yields, a practice known as controlled environment farming, including indoor vertical farms that rely on artificial light and technology, Projects attract capitalists.

But the industry faces challenges, including rising energy costs, technology limitations, and the ability to scale production to cut costs.

Jane A. said: Giacomelli, professor of biosystems engineering at the University of Arizona, says that farming in a controlled environment has been around since the 1970s. What made the move indoors possible was the lower price of LED lights, which were 94 percent lower in 2015 than in 2008.

The term vertical farm was popularized by Dixon Despommer, an emeritus professor of environmental health sciences at Columbia University. Vertical farming is expected to grow to $9.7 billion worldwide by 2026, from $3.1 billion in 2021, according to, a data analytics company. Pitchbook, a data and financial software company in Seattle, tracked 33 deals worth about $960 million in 2021, up from $865 million the previous year and $484 million in 2019.

AppHarvest, a greenhouse grower, recently went public through a merger with Novus Capital. And in August, Atlanta-based Cox Enterprises acquired BrightFarms, another greenhouse operator.

Scientists warn that the technology has limitations, with LEDs, sensors and operating systems increasing utility costs. “They don’t want to be warehouses, they want to be food production facilities,” Professor Giacomelli said. “And food production facilities didn’t have that kind of money before.”

Money creates demand for warehouse space. Kalera, a vertical farm company based in Orlando, Florida, harvests greens and culinary herbs there, and in Houston and Atlanta. Farms will open in Denver, Seattle, Honolulu and St. Paul later this year, and farms are scheduled to open in Columbus, Ohio in 2023. Farms have also opened in Munich and Kuwait.

Details are hard to come by because farms closely guard their intellectual property and designs for growing systems, materials, and structures.

“Everyone has their own secret sauce,” said Brent de Jong, chairman and CEO of Agrico Acquisition Corporation, which announced in January its merger with Kalera.

But as long as the building being used as a vertical farm meets height standards and avoids high utility costs, “there is no limit to where I can build a farm,” said Austin Martin, Calera’s chief operating officer.

Basic requirements for vertical farm warehouses include access to major highways, a day’s drive to major population centers and an educated workforce that understands automation and plant science.

“The plant for the production of leafy greens and delicate greens is similar to a semiconductor plant that provides a controlled environment to manufacture their products on a predictably automated basis,” Mr. de Jong said in an email.

The plants are stacked in vertical rows that reach 30 feet or more in height, said Neil Mattson, a professor of horticulture at Cornell University. Additional space is dedicated to aisles, harvesting and packaging, but there are no common metrics or industry standards.

One example of how environmentally controlled agriculture is transforming industrial space is developing in Pennsylvania, which serves markets from Boston to Richmond, Virginia.

Bowery Farming, based in Manhattan, is equipping a 150,000-square-foot farm on the site of a former steel mill in Bethlehem, Pennsylvania, scheduled to open in May.

Bowery also owns three farms in Kearney, New Jersey, two of which are for research and development. The third is a commercial operation serving grocery stores and e-commerce businesses in the Northeast. Another facility in Nottingham, Maryland runs on hydroelectric power. The company announced plans to expand near Atlanta and in the Dallas-Fort Worth area.

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

Darren Thompson, Bury’s chief financial officer, said he expects the new Bowery Farms to be similar in size to the Bethlehem Farms. “Having so many variations from farm to farm hurts my ability to increase costs,” he said.

Peter Bolt, executive vice president of JG Petrucci, which constructed the building’s structure and office space, said the Bethlehem site has heavy-duty power backing, sewage and water capacity and fiber optic cables. “But the tenant has prepared the building for the growth process,” he added.

Developers are also asking for proximity to food distribution centers to save on transportation costs, said Brent Vernon, executive director of the Pennsylvania Governor’s Task Force, which is working to bring business into the state. He said state funding and grants are evaluated based on factors including redevelopment of abandoned areas, unemployment rates and job creation potential.

Pennsylvania officials have said Bowery will create and maintain at least 70 full-time jobs over the next three years and have pledged to invest at least $32 million.

Upward Farms, a Brooklyn-based startup that mixes vertical and aquaponics and uses fish waste as fertilizer, is building a 250,000-square-foot warehouse on six acres in Lucerne County, Pennsylvania, about 100 miles from Manhattan.

Local production is better because it brings leafy greens closer to the retailer and consumer, said Jason Green, CEO and co-founder of Upward.

To the west, in Selinsgrove, is a 280,000-square-foot greenhouse belonging to BrightFarms. That company has begun developing five new greenhouses that will be ten times that size, said Steve Platt, CEO of Bright Farms.

Reaching a scale that is sustainable for businesses could mean expanding the types of crops grown in vertical systems, from leafy greens to vines and fruit crops, said Russell Redding, the Pennsylvania Secretary of Agriculture. For example, Bowery Farming has announced plans to distribute limited-edition strawberries in New York.

But some scholars have doubts about the industry’s ability to expand and diversify given the limitations of current technology. Tomatoes use 60 percent more electricity than lettuce, and strawberries use twice as much, said Bruce Bugby, director of the Crop Physiology Laboratory at Utah State University in Logan.

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

Morgan Bateson, president of Solid State Lighting Services in Johnson, Tennessee, and an advisor to the Department of Energy, was more candid. “LED won’t go down much more” in terms of cost, he said. “Where investors conflict with physics, they are going to have a hard time.”

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