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Pepsi considering mammoth warehouse on west side: Sources say firm's been scouting sites since spring

September 4, 2006

A firm representing PepsiCo Inc. has been scouting sites on Indianapolis' west side for a mammoth warehouse and distribution facility, and sources said the beverage giant is leaning toward a site near its Gatorade bottling plant.

Local real estate brokers said Chris Clayton, a broker with the Cleveland office of Dallas-based Staubach Co., visited sites and put out a request for proposals for the project in early April, calling for 1 million square feet of industrial space with the possibility of future expansion.

Clayton declined to comment, saying he couldn't speak about client activities without their permission.

The local Pepsi expansion, if it happens, would be huge. It would easily top the biggest industrial lease announced in 2005: Epson America Inc.'s 750,000-square-foot, build-to-suit in Plainfield. Panattoni Development Co. built Epson's warehouse.

"It's a big requirement," said Thomas Theobald of the Pepsi deal. Theobald is senior vice president with the local office of Chicago-based Verus Partners, one of the developers that had hoped to win the project. "If it comes down, this would be the biggest build-to-suit transaction this year."

Verus-along with Lauth Property Group, Holladay Properties and two separate partnerships-a partnership of Browning Investments Inc., and Duke Realty Corp. and a union of Browning and ProLogis-were just a few of the handful of developers and landowners who made pitches to win the project, brokers said.

In late April, several were told their sites weren't what Pepsi is looking for.

Verus, which proposed building a facility at its East Plainfield Business Center, was eliminated because of the configuration of the site it pitched, Theobald said.

Local real estate brokers believe the front-runner is South Bend-based Holladay Properties, which proposed a site near the Gatorade bottling facility in Ameriplex-Indianapolis, a 1,500-acre industrial park that stretches along Six Points Road between Interstate 70 and State Road 67.

Built in 2000, the Gatorade plant is 1.4 million square feet and is expanding to accommodate a new line that will be operational in the first part of 2007, according to Gatorade spokeswoman Heather Mitchell. The plant employs 477 workers.

Holladay Properties still has lots of room at its park, with only 4.6 million of a possible 15 million square feet built out, according to Holladay Senior Vice President Chris Wilkes.

Sources said Pepsi is focusing its attention on a site directly south of I-70 that would be roughly half in Marion County and half in Hendricks County. Wilkes, Gatorade and Pepsi officials declined to comment.

Economic development backers are hopeful something will materialize.

"Gatorade and PepsiCo have been valued corporate citizens and employers," said Gordon Hendry, interim president and CEO of the Indy Partnership. "They've grown significantly in recent years and we hope that there will be future growth."

Others said plans for a distribution center have been floated before and that hurdles remain. They said negotiating infrastructure improvements and providing incentives for the site being discussed would be more time-consuming with two counties involved.

"This is not necessarily a done deal," said one real estate insider, who asked that his name not be used.

Pepsi has committed to expansions elsewhere to keep up with strong demand in its non-carbonated beverage lines, such as Gatorade, Aquafina water, Lipton ready-to-drink teas, Tropicana juices and Propel sports drink.

In June, it announced it would build a 1.5-million-square-feet, $180 million manufacturing and distribution plant in Pryor, Okla. That will help keep pace with a 23-percent increase in non-carbonated beverage sales by volume nationally that Pepsi reported in July, a jump it attributed in part to "double-digit growth" in Gatorade sales.

The company said it will continue to boost capital spending to support the North American Gatorade business. Between that and investments in a "business process transformation" initiative, net capital spending could come in at $2.2 billion for 2006, it estimates.

PepsiAmericas Inc., an independent, publicly traded company partially owned by PepsiCo, has a separate facility on Indianapolis' northwest side at 5411 W. 78th St. that bottles carbonated Pepsi products and Aquafina.
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