COVER STORY, APRIL 2007

A NEW BRAND OF INDUSTRIAL DEVELOPMENT
Developers create form and function in the Northeast.
Compiled by Stephanie Mayhew

Throughout the Northeast, industrial developers are working feverishly to find suitable land to construct state-of-the-art facilities to the meet the growing demand from the multitude of industrial corporations conducting business throughout this busy corridor.

DP Partners, a national industrial property and commercial real estate development company based in Reno, Nevada, has been committed to developing industrial sites for 45 years. According to Stephen G. Bailey, RLA, eastern region director for DP Partners, the expansion of global trade in the U.S. economy has many corporations rethinking their logistics strategies to achieve more efficient product distribution. In addition, the demand for Class A industrial space is also driving new industrial development throughout the Northeast. 

To meet the current demand and the needs of their customers, DP Partners has created their “LogistiCenter” brand, which are state-of-the-art industrial parks that have interior road systems that facilitate quick ingress and egress, wide paved drive lanes, deceleration lanes, middle turning lanes, interconnecting perimeter roads around the park, and land within the park for excess and temporary secured car and trailer parking and extra staging area for trucks. Bailey notes that DP select sites that are just slightly ahead of the growth curve, but are still affordable enough to hold and improve over a multi-year build-out. “It is a balancing act between locations that represent good value and provide superior access to the transportation infrastructure and locations that are basically a pioneering site,” says Bailey. Once a suitable site is selected, DP develops flexible, state-of-the-art industrial parks designed to satisfy the needs of users from 20,000 square feet in multi-tenant buildings to build-to-suits of 1 million square feet and larger.

LogistiCenter at Logan

DP Partner’s LogistiCenter at Logan is located at Center Square and Harrisonville Roads in Gloucester County in Logan Township, New Jersey. Set on 1,000 acres, the master-planned logistics center includes 18 industrial buildings that total 5.5 million square feet of warehouse, distribution and manufacturing space. Situated off Exit 10 on Interstate 295, the center is just 12 miles southwest of Philadelphia, 12 miles south of the Philadelphia International Airport and 12 miles south of the Port of Philadelphia. In addition, the center is rail-served by Class 1 railroads via SMS Rail Lines. “The rail service with access to two Class 1 national railroads, the ample land, flexible zoning and proximity to a great transportation network are the driving factors for the development of this project,” says Bailey.

Planned to fit the needs of a variety of users, the LogistiCenter at Logan offers speculative and built-to-suit buildings for lease and purchase, as well as land sales to corporate users. This center and DP Partners is unique because it is willing to invest in speculative development. “This business model allows our tenants to achieve the speed of delivery they need. For example, Freightliner, LLC, recently leased our entire first speculative building, a 359,573-square-foot facility. This is a good example of our ability to service tenants in a market that hasn’t had a speculative building for many years,” says Bailey.

In the New Jersey and Philadelphia markets, tenants are looking for competitively priced space in close proximity to their customers in the Northeast. An industrial  center such as Logan offers ample parking, affordable rental rates and easy access to customers and distributors. Bailey notes that historically these markets have been home to businesses in the food-service and pharmaceutical industries, but DP Partners is targeting a wide variety of users, particularly businesses in the immediate area or elsewhere in Southern New Jersey or Philadelphia that are looking to expand to larger Class A buildings. Recently, DP  has had strong interest  in Logan from manufacturers and third-party logistics providers. In addition to Freightliner, LLC, Andersen Corporation is another signed tenant and Advanced Drainage Systems, Inc. has purchased property at the center.

The $375 million project was designed by Cathers & Associates of Malvern, Pennsylvania, and was constructed by Blue Rock Construction of Burlington, New Jersey. Construction on the center first began in summer 2003 and is scheduled for a 5- to 7-year build-out. Financing for construction was provided by Bank of America and brokerage services are being provided by CB Richard Ellis.

LogistiCenter at Carlisle

The LogistiCenter at Calisle contains seven buildings totaling 4 million square feet.

Situated on 246 acres in Cumberland County in North Middleton Township, Pennsylvania, LogistiCenter at Carlisle is currently nearing completion. This $26 million center, which  contains seven buildings totaling 4 million square feet, provides tenants with high-cube warehouse, distribution and manufacturing space in buildings that range from 231,000 square feet to 1.4 million square feet. “This is a classic example of our LogistiCenter-branded parks. It is very well planned with room for our tenants to expand their buildings or move to adjacent buildings. There is ample parking and loading, and at the same time, the facilities are visually attractive,” says Bailey.

Located along Central Pennsylvania’s logistics corridor, the property is less than 1 mile north of Interstate 81 off Exit 44 on Pennsylvania Route 641 with Pennsylvania Turnpike (I-76) visibility. In addition, the park is convenient to the U.S. interstate highway system via I-76, I-70, I-78, I-83 and I-80, and it is within a 400-mile radius of major Mid-Atlantic, Northeast and the Eastern Seaboard markets. “The Carlisle area is historically a logistics crossroads.  It is known nationally for its great concentration of interstate highways, intermodal yards, UPS/FedEx hubs, trucking companies, and a strong employment base,” remarks Bailey.

Much like all of DP Partners LogisitiCenter brand parks, Carlisle offers speculative buildings for lease and build-to-suits for lease and purchase. Current signed tenants include Borders, Kuehne + Nagel, Crown Bolt, Supplies Network, Andersen Corporation and Pepsi-Cola. “DP Partners has had great success attracting large companies and multi-national corporations, all of which recognize the value of locating in a Class A building in a well-planned, well-located park,” says Bailey.

According to Bailey, the success of the Carlisle is due in part from the support of municipal officials in North Middleton Township and Cumberland County, and in return, LogistiCenter at Carlisle has created hundreds of new jobs and significant tax revenues for the community. General contractors, The Whiting-Turner Contracting Company of Allentown, Pennsylvania, and QEI Construction Group, LLC, of Reading, Pennsylvania, began construction on the park in 2002 and completion is scheduled for fourth quarter 2007. TranSystems, Inc. of York, Pennsylvania, provided architecture services and financing for construction was provided by Bank of America.

LogistiCenter at Allentown

LogistiCenter at Allentown in  Bethlehem, Pennsylvania, includes three buildings that offer approximately 1.66 million square feet of high-cube industrial space.

In 2003, DP Partners began building the 105-acre LogistiCenter at Allentown in the Bethlehem, Lower Nazareth Township in Northampton County, Pennsylvania. Nestled within the Lehigh Valley, the center includes three buildings that offer approximately 1.66 million square feet of high-cube warehouse, distribution and manufacturing space. “The Lehigh Valley is a natural area for DP to expand our LogistiCenter brand concept. It is home to one of the strongest distribution markets in the Northeast, due primarily to its location in close proximity to the large population centers in New York and New Jersey,” notes Bailey. “It is also a lower-cost alternative for tenants that need to locate their distribution facilities near these highly populated markets. Plus, this area has a well-trained workforce with a history of experience in warehousing and distribution.”

The LogistiCenter at Allentown is one of the largest rail-served parks in the Lehigh Valley industrial market, offering direct bulk-rail and top-tier intermodal service by the Norfolk Southern Railroad and access to CSX and Amtrak intermodal services. In addition, its location provides excellent access to the U.S. interstate highway system via I-78, I-80 and the Pennsylvania Turnpike (I-76), plus much like LogistiCenter at Carlisle, the center is situated within a 400-mile radius of the major Mid-Atlantic, Northeast and the Eastern Seaboard markets.

The buildings in the park are available as speculative buildings for lease and build-to-suits for lease and purchase. Current signed tenants include Hopkins Distribution Company and C&S Wholesale Grocers, Inc. “In LogistiCenter at Allentown, DP built two speculative facilities that were designed for maximum flexibility. This attention to design paid off for C&S, which initially located in one building and subsequently expanded into the adjacent building. Recently DP connected the two buildings into a 1 million-square-foot facility to increase C&S’s operating efficiencies,” says Bailey.

The $124 million project was designed by TranSystems, Inc., with civil engineering services provided by Rettew Associates, Inc., of Nazareth, Pennsylvania. The center, which is scheduled for a 4-year build-out, is nearing completion and is being leased by Michael J. Alderman, SIOR, director of leasing for the eastern region of DP Partners.

 Today, quality of construction and site planning are major concerns for tenants. DP Partners knows that older metal-box warehouses with an 18-foot ceiling height are no longer satisfactory as tenants require 32-foot clear ceilings and architecturally detailed buildings with state-of-the-art heating, lighting and fire-protection systems, all of which are being found across the Northeast as developers like DP Partners work to create industrial centers that meet the needs of today’s industrial operations. 

Expansion of Brooklyn Navy Yard Perry Avenue, an 89,000-square-foot multi-tenanted building, is currently under construction. Located in the thriving borough of Brooklyn, New York City, the 4 million-square-foot Brooklyn Navy Yard is situated on roughly 300 acres and is home to a multitude of industrial tenants ranging from food processing and manufacturing companies to high-profile media and entertainment studios. Sitting at virtually 100 percent capacity for the past 5 years, the Brooklyn Navy Yard Development Corporation (BNYDC) recently saw the need to expand this in demand industrial park. According to Andrew Kimball, president and CEO of the BNYDC, the Brooklyn Navy Yard is a key part of the Bloomberg administration’s five borough economic development strategy. “The mayor recognized the jewel that the city had in the Brooklyn Navy Yard and began investing very significant amounts in the basic infrastructure. The mayor understood that if the basic infrastructure issues were addressed, it would help drive private investment in the yard,” says Kimball. The expansion of the Navy Yard will take place in two phases. Phase I will comprise a minimum of 401,900 square feet and include at least seven new buildings located on the western end of the Yard. In October 2006, the BNYDC broke ground on the first building in phase I, a $20 million, 89,000-square-foot industrial building on Perry Avenue. Phase I construction will also include the partial demolition and rehabilitation of Building 128, which when completed, will provide two bigger buildings that will contain a total of 200,000 square feet. These two buildings are specifically being developed for the food manufacturing and processing sector. Two additional buildings totaling at least 175,000 square feet are also scheduled for construction in phase I. Phase II is still being finalized, but will include approximately 1.5 million square feet in the Yard’s eastern portion. Once phase I and II are complete, the expansion will total approximately 2 million square feet and will expand the Yard’s capacity by 50 percent. All of the buildings being developed in the expansion will be LEED Certified by the U.S. Green Buildings Council. “The BNYDC recognizes its obligation to the broader city to build green, but also an obligation to the communities around the Yard that have always had a close working relationship with the BNYDC,” says Kimball. The BNYDC expects to attract tenants from emerging sectors such as film, food, furniture and other types of artisan crafts. “When you look at the exploding growth in the housing and commercial market, it is happening in the five boroughs, so there is a real rationale for these companies to be near that demand,” says Kimball.  Construction is set to be complete on the Perry Avenue building by mid 2008, and the other buildings are set to come online sequentially after that with the entire expansion initiative taking place over the next 3 years. — Stephanie Mayhew

CenterPoint Commerce & Trade Park CenterPoint offers commercial and industrial space for its tenants. CenterPoint Commerce & Trade Park is a new industrial park in Pittston, Pennsylvania, that will offer tenants parcels for both commercial and industrial use. Situated on 1,800 acres with access to several major interstate highways and corridors, the development will potentially accommodate millions of square feet of industrial build-out. The park contains sites for buildings ranging from 20,000 square feet to 1 million square feet and multi-tenanted buildings with space as small as 6,000 square feet. Jim Hilsher, vice president of marketing for Mericle Commercial Real Estate Services, says, “Mericle believes that in developing CenterPoint, we are meeting a demand for highly accessible, low-cost, high quality facilities on the East Coast on the fringe of the primary markets.” Construction has commenced on phase I of CenterPoint, which will encompass approximately 191 acres, and the remainder of the construction will be on-going with fast track build-to-suit projects and speculative build-out. Construction has already been completed on three buildings. This includes a light industrial 297,000-square-foot building for a single user, and a second light industrial building that contains a total of 87,015 square feet that is being leased by FedEx Ground. In addition, Mericle has completed a speculative 128,992-square-foot, multi-tenant building, which already has 32,000 square feet leased. “Mericle expects to attract desirable tenants in need of light industrial, manufacturing, or warehousing operations within easy access of I-81 and the Boston-Washington Corridor for the majority of the park. We are also hoping to attract back-office operations from the congested New York/New Jersey area for one parcel of our park that will have Class A office space and a campus-like setting,” says Hilsher. Other signed tenants within the park include the Men’s Warehouse and Ferguson Enterprises. In addition to its access to I-81, the park is strategically located in close proximity to 476, the Northeast extension of the Pennsylvania Turnpike, and it is within minutes of Interstates 80, 84 and 380. According to Hilsher, this ideal location is how CenterPoint got its name. “CenterPoint is named after its most unique aspect — its central location in the Boston-Washington Corridor. It is also centrally located in the Scranton/Wilkes-Barre/Hazleton Metropolitan Statistical area, which contains an untapped talented labor pool for park tenants,” says Hilsher. Along with its attractive location, Mericle hopes to attract users with several tax incentives. All sites are pre-approved for tax exemption on all improvement for up to 10 years, and all sites are in an established Foreign Trade Zone.   — Stephanie Mayhew