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COVER STORY, NOVEMBER 2007
DEVELOPMENT HIGHLIGHT: MIDWEST BUSINESS PARKS
Compiled by Kevin Jeselnik and Coleman Wood
“From a distribution standpoint, the Midwest is a great place to be,” says Trey Hollingsworth, managing partner of Clinton, Tennessee-based Hollingsworth Capital Partners. And with easy access to interstates, major population centers, an abundance of available land and lower rental rates, it is easy to see why companies such as Hollingsworth are expanding into the Midwest.
With the company entering markets such as Chicago, Indianapolis, St. Louis, Columbus, Madison and Fort Wayne, its focus up to this point has been in the acquisition and development of business parks.
“There’s nothing more impressive to tenants than being able to drive into a park where everything works — the landscaping, buildings, parking and signs are all consistent. I think that it just sends such a strong signal to tenants that this is a place that will continue to appear Class A, whereas if you’re outside a business park, you just can’t control what the next property is going to do,” says Hollingsworth.
Hollingsworth continues to be bullish on the Midwest. The company sees tremendous growth in the region, and plans to add 5 to 7 million square feet of Midwest properties to its portfolio in the next 12 months. It is also planning on expanding into even more Midwest markets, including Cincinnati and Kansas City.
“We are actively looking for both acquisition and development opportunities across the Midwest, and I am prepared to put some dollars behind my assertion,” Hollingsworth says.
So what is it that is drawing companies such as Hollingsworth Capital Partners from all over the country into the Midwest? This month, Heartland Real Estate Business spotlights some of the biggest industrial and office business parks in the Midwest, to see just what the region has to offer.
KCI Intermodal BusinessCentre
• Kansas City, Missouri
• Located at the interchange of Interstate 29 and 112th Street adjacent to Kansas City International Airport
Developer: Trammell Crow Company
Leasing agent: CB Richard Ellis
Master Planner: TranSystems
Size: 20 buildings; approximately 800 acres
Description: KCI Intermodal BusinessCentre will be constructed in two phases. The first phase will comprise five buildings on 183 acres, with the other 15 being constructed in Phase II. Site improvement plans and permitting are currently underway, with infrastructure work set to commence in spring 2008. Construction for the first building, an approximately 500,000-square-foot speculative distribution center named KCI LogisticsCentre I, will commence in the spring with an estimated completion in fourth quarter 2008. Additional speculative and build-to-suit projects will go up over the next 10 to 12 years, depending on market and tenant demands.
Located seconds away from Interstate 29 and on the property of Kansas City International Airport, KCI Intermodal BusinessCentre is putting itself in a position to take advantage of Kansas City’s growing presence as a Midwest distribution hub. The industrial park will focus on big box distribution centers and air cargo-related properties, but space will also be made available for traditional warehouse properties and tenants seeking a prime location in the KCI submarket. The park also has foreign trade zone status and competitive pricing, which will help put Kansas City on the map as an inland port.
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Minooka Ridge Business Park
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Minooka Ridge Business Park
• Minooka, Illinois
• Located at the interchange of Interstate 80 and Ridge Road
Developer: Opus North Corp.
Leasing agent: Colliers Bennett & Kahnweiler
Architect: Opus Architects & Engineers
Size: 221 acres; 3.7 million square feet of rentable industrial space
Description: The 221-acre park will feature four warehouse and distribution buildings totaling 3.7 million square feet. Minooka I, an 861,438-square-foot building, was recently completed and sold to Macy’s, and Minooka II, a 965,183-square-foot, speculative facility, is under construction and scheduled for a June 2008 completion. Total project build-out is expected in 2010.
Located in the Interstate 80/Joliet submarket 50 miles southwest of downtown Chicago, Minooka Ridge Business Park is being constructed to fill the needs of big-box tenants looking for 800,000 to 1 million square feet of space. Opus is using the park’s proximity to Chicago, major interstates and intermodal centers to attract large, regional warehouse users, including consumer and retail product distributors, intermodal importers and third-party logistics operators. As growing intermodal volume in the area fuels the need for larger warehouses, the Chicago market will become a prime location for regional distribution centers.
Solar Business Park
• Kansas City, Missouri
• Located at Interstate 435 and Truman Road
Developer: Dean Realty Company
Size: Up to 3 million square feet; more than 225 acres
Description: Currently, there is one finished, build-to-suit, light industrial building in the park, which can accommodate up to 3 million square feet of industrial space within its two components. Solar Business Park comprises 126 acres, and Solar Stone, the below-grade component, totals 106 acres. The property offers build-to-suit sites with Dean’s in-house construction department, which utilizes specific contractors and architects based on the building type and specifications. The developer is currently targeting large-format industrial, manufacturing, warehouse and distribution users for the site.
Dean Realty Company selected the site because of its prime center city location — where opportunities for development along the city’s main arteries are becoming limited — and for convenient access to Kansas City’s primary highway interchanges. The availability of above and below-ground acreage offers potential tenants unique amenities and options.
Cambridge Business Park
• Kansas City, on the Missouri/Kansas state line
• Located at Interstate 35 and Cambridge Circle along the state line
Developer: Dean Realty Company
Size: Up to 18 buildings; more than 100 acres
Description: The park already features 11 buildings and 52 tenants. The targeted tenants include office, flex and retail users. Dean is currently developing an 88,875-square-foot flex facility for RiteMade Paper Converters Inc, an employee-owned, locally based business. The developer was drawn to the prime location along a major interstate.
Cambridge Busines Park is a flex/office development located on I-35, and straddling the Missouri/Kansas state line in Kansas City. There is no completion date set, and while the buildings conceptual plan allows for up to 18 total buildings, the master plan is flexible to fit the needs of any future tenants. The park uniquely offers building sites and tax abatements/incentives for both Kansas and Missouri, and is located minutes from the downtown area. Several build-to-suit sites are currently available.
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Chesterfield Corporate Center
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Chesterfield Corporate Center
• Chesterfield, Missouri; 18199 Chesterfield Airport Road
Developer: Duke Realty; Gundaker Commercial Group will develop the retail portion of the project.
Size: 16 acres, two office buildings totaling 252,000 square feet, 1 acre has been donated to the county; 15 acres on the south half of the site has been purchased for retail development
Description: Chesterfield Corporate Center will consist of two Class A office buildings totaling 120,000 and 132,000 square feet. Site preparation work has commenced with the demolition of the former Gumbo Jail on the property. If prospective tenants are not identified, development will continue on a speculative basis. Gundaker will also be developing a retail project along Chesterfield Road.
A lot of buzz has been made lately about the improvements to the Interstate 64/Highway 40 corridor and the rush of development in the Chesterfield area that has followed it. A crop of new office developments have appeared, seeking to provide space for large office users wishing to expand into the area. A new interchange is also being constructed at the intersection of Spirit of St. Louis Boulevard and I-64/40, which will provide easier access to the office park.
ProLogis Park Arsenal
• Wilmington, Illinois
• Located near the intersection of Route 53 and South Arsenal Road
Developer: ProLogis
Architect: Ware Malcomb
Size: The park is located on 775 acres; ProLogis has acquire 184 acres, and has optioned an additional 591 acres. At full build-out, the park is expected to comprise 10 buildings encompassing 10 million square feet.
Description: ProLogis Park Arsenal will be constructed through phased development. Phase I includes 184 acres, which will comprise 3.2 million square feet when completed. Construction of the first facility, an 800,000-square-foot facility with expansion capability up to 1 million square feet, is under construction and scheduled for completion in summer 2008. Future phases will accommodate approximately 6.8 million additional square feet, and will be constructed based on market demand. Discussions are underway with several parties interested in leasing space in the park.
ProLogis Park Arsenal is located in the Interstate 80 submarket of Chicago, less than 5 minutes south of BSNF Logistics Park – Chicago, the largest intermodal facility in the Chicago area. ProLogis chose this location to attract companies that require immediate access to the intermodal facility, as well as those seeking to take advantage of the parks close proximity to interstates 55 and 80. BNSF is planning to expand the capacity of its rail network serving Chicago and, once this happens, it will play an even larger role as a key distribution hub for container goods moving from the West Coast throughout the eastern third of the country. With its status as a state-designated Enterprise Zone, property tax-abatement program, sales tax exemptions and job creation tax credits, ProLogis Park Arsenal has positioned itself perfectly for the increased interest the area will soon be receiving.
Plainfield Business Center at Airwest
• Plainfield, Indiana, southwest of Indianapolis
Developer: Opus North Corp.
Architect: Opus Architects & Engineers
Size: 13 buildings; 6.1 million square feet
Description: A total of 11 buildings are complete, with two more under construction. So far this year, BFS Diversified has leased Airwest 11, Ozburn-Hessey Logistics has leased Airwest 6 and Brightpoint North America has leased Airwest 8.
Located right in the middle of the most active industrial submarket in Indianapolis, Plainfield Business Center at Airwest is catering to big-box industrial users looking for space. The park is ideally situated in close proximity to Indianapolis International Airport, the FedEx hub and Interstate 70. With the last of the original 13 planned buildings nearing completion, Opus is in talks to obtain more land for the park.
The CenterPoint — KCS Intermodal Center
• Kansas City, Missouri
• Located on the former Richards Gebaur Air Force Base. The project is situated on the corner of U.S. Highway 71 and Route 150.
Developer: CenterPoint Properties
Partners: Kansas City Southern Railway Company
Size: The CenterPoint KCS Intermodal Center is anchored by an approximately 370-acre intermodal facility that is being developed by Kansas City Southern.
Directly adjacent to that facility will be a 970-acre industrial park with up to 7 million square feet of warehouse and regional distribution facilities. The current plan calls for up to 20 buildings, from 500,000 to 1 million square feet.
Description: No buildings have broken ground yet; CenterPoint expects to begin construction of the first facility next spring. The KCS intermodal yard is expected to open early next year, with all infrastructure improvements complete by fall 2008. The park is geared toward transportation-oriented users, included regional distributors, third-party logistics companies, shippers and manufacturers. The project is being developed on a build-to-suit basis.
The park offers direct intermodal rail service, and buildings can be rail-served if required. A connection to U.S. Highway 71 will help transfer trucks to the area’s network of interstates, and each building will have ample truck parking and cross-docking.
The park will also have direct rail service bringing international freight from the Port of Lazaro Cardenas in Mexico, which has spurred additional intermodal projects throughout Kansas City. CenterPoint expects that the market will need a significant new supply of warehousing to handle the expansion.
NorthPark
• St. Louis
• Located approximately a half-mile from Lambert St. Louis International Airport and northeast of the Interstate 70/Interstate 170 interchange
Developer: NorthPark Partners, a partnership between McEagle and Clayco
Size: 443 developable acres (550 total); up to 5.5 million square feet
Description: Sitework on the $400 million NorthPark business park development began fall 2006. The project will include more than 5 million square feet of office, retail and light industrial space. Amenities will include multiple restaurants, day care and a health club, among other offerings.
NorthPark’s location just across the street from the Lambert airport makes it ideal for corporate users that travel frequently. The first phase, which overlooks Ramona Lake Park, an existing park that the development team will clean up and enhance, will include office, light industrial, a $12 million, 190-room Hilton Garden and a conference center. There are already two finished, occupied buildings on the site, with two 150,000-square-foot spec buildings underway, for which some tenants have already been secured. Additional buildings in the works include a 120,000-square-foot build-to-suit and a 75,000-square-foot office facility. The developers are recruiting users seeking a national headquarters campus as ideal tenants. The park will also include a new MetroLink public transit station, as well as ample green space and walking trails created by Great Rivers Greenway.
CenterPoint Intermodal Center
• Elwood, Illinois
• Located 40 miles southwest of downtown Chicago at the Interstate 55/Arsenal Road interchange.
Developer: CenterPoint Properties
Leasing agent: NAI Hiffman/NAI Global Logistics
Size: 1,100 acres, more than 12 million square feet at full build out
Description: CenterPoint Intermodal Center is the nation’s largest inland port, and handles more than 1 million container lifts per year at the adjacent 770-acre BNSF Logistics Park Chicago. The location of the park next to the BNSF center is ideal, as it creates greater efficiency for companies that use intermodal facilities, reducing transportation costs and increasing throughput. The park will total more than 12 million square feet at build-out, catering to distribution, warehouse and light manufacturing users. CenterPoint Intermodal Center is a designated Foreign Trade Zone and a designated Enterprise Zone. The project was designed for the growth of the BNSF operation and the park’s industrial acreage components. Additional construction phases will be dictated by tenant and market requirement.
Currently, there are eight completed buildings totaling approximately 6.9 million square feet, including two facilities for Wal-Mart measuring 1.6 million and 1.8 million square feet.
The newest development within the Intermodal Center is the two-building Import Distribution campus. The first building is underway, and will total approximately 1.18 million square feet. Delivery of the first building is expected in the first quarter of next year. The second building will be of roughly the same size.
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