After conducting the research to build Lumber yard, the lumber yard is still grayed out and I am unable to use it even though I have meet all of the prerequisites.

I have found a similar topic on Granaries.... which means that there are other buildings that may do this (I will update this and add them, if someone else doesn't beat me to this.  

[Update]: It seems that Lumber Yard requires a level 2 city rather than one! Either a typo in the requirement or in the code.

[edit] It seems there is some special requirement for Granaries (not sure what.)