In 2003, four men decided to leave careers at Chicago-based development powerhouse Higgins Development Partners LLC to start their own company.
The result, Verus Partners LLC, an industrial, office and institutional developer, has grown rapidly, opening two offices in Canada and one in Indianapolis, and is pondering a new office in Charlotte, N.C. And its 1-year-old local office is spearheading an aggressive move focused on developing speculative industrial space.
Last year, Verus hired Tom Theobald, a 19-year commercial real estate market veteran, away from Indianapolis-based Browning Investments Inc. and set up shop near Keystone at the Crossing. Since opening, Verus’ local branch has bought or optioned nearly 400 acres of land and has three projects in the pipeline that total more than $57 million in initial construction.
The local projects are all partnerships between developer Verus and financer MetLife Real Estate Investments, a subsidiary of MetLife Inc.
Verus’ first major moves are in stomping grounds Theobald knows through his work at Browning-Whitestown and Plainfield.
In Boone County, Verus is joining what has become a development hot spot where Browning and locally based Duke Realty Corp. are jointly undertaking a massive, 616-acre industrial and distribution park development dubbed AllPoints at Anson.
Just west of that location, in Perry Industrial Park, Verus partnered with Indianapolis-based GDI Construction for a 624,000-square-foot, $20 million distribution and office building. The space at 5100 S. Indianapolis Road should be ready Oct. 1. The local office of St. Louis-based Colliers Turley Martin Tucker is marketing it.
“Whitestown is like Plainfield was about 10 years ago,” Theobald said, referring to the tremendous industrial growth that has taken place in Plainfield over the last decade.
About a mile south of that building, Verus also has another 175 acres under option for future development.
In Plainfield, where space to develop is scarcer, Verus will start next year on an 800,000-square-foot building on 175 acres it has pulled together north of Stafford Road and directly east of Browning’s AirTech Park.
The $25 million building is the first of a projected three to five buildings at the location that will eventually house 3 million square feet of distribution space.
Last, on the other side of Indianapolis, Verus has a smaller project in Saxony in Noblesville slotted for completion in April 2007. It will include two distribution and flex office buildings totaling 180,000 square feet. Theobald hopes it will appeal to retailers who locate in the massive outdoor mall-Hamilton Town Center-Indianapolis-based Simon Property Group Inc. has planned nearby.
He also thinks small-business owners who live nearby will like the space, which will be marketed by Indianapolis-based Summit Realty Group.
Nationwide and in Canada, Verus has 2.8 million square feet under development for a total price tag of $130 million. That’s slightly larger than Browning’s numbers when all partnerships are included but much smaller than other local heavy hitters.
According to May’s Commercial Property News, Duke’s nationwide current development is 8.4 million square feet, with about 10 million square feet of that being industrial space. Lauth Property Group has 4.9 million square feet under development, including 3 million square feet in industrial.
And while many of Verus’ local moves are into areas where Browning is building, Browning Executive Vice President Dennis Dye said the company isn’t concerned about the new market player.
“We’re very comfortable with our competitive positions given the land positions and joint ventures we’ve got with our partners,” Dye said.
But Browning is irked-as evidenced by a lawsuit it filed in May alleging that Theobald’s work for Verus broke a noncompete agreement he signed with Browning. That court case is pending.
Industrial brokers watching Verus, though, say it’s making the right moves. Terry Busch, senior vice president in industrial properties for the local office of Los Angeles-based CB Richard Ellis, said staking out a large position in Plainfield is a safe bet.
“Plainfield is a proven market and continues to be highly sought after,” Busch said. “History would show that spec buildings don’t stay vacant more than 12 months out there and sometimes they’re leased before they’re completed.”
Busch said development in Whitestown is a “bit more pioneering,” but with Duke’s and Browning’s enormous planned development, it’s a surer market. And, he said, it has better play with potential renters, especially those that already have locations in Marion County, than developments in Lebanon.
“Lebanon seemed a stretch for many companies,” he said.
Tag Birge, vice president and market officer for locally based Lauth Property Group, said Verus’ entry into Indianapolis shows confidence in the market. Verus isn’t going head-to-head with any of Lauth’s industrial developments, which are concentrated in Brownsburg and Greenwood.
“It shows vibrancy in our market that more out-of-town players think this is the place to invest money,” Birge said.
Verus’ Indianapolis office also will serve as its hub for attempts to break into other markets, including St. Louis; Louisville; Nashville and Memphis, Tenn.; and Columbus, Ohio.
Theobald said that potential was part of the reason he took the job.
“It’s an opportunity for me to have more autonomy,” Theobald said. “I’m not exactly out on my own, but I’ll get to broaden my opportunities through the Midwest.”
Theobald also recruited Ryan Hahn, who left United Construction in Indianapolis to join Verus as development project manager. Hahn said he made the move to concentrate on early project planning instead of the day-to-day details of running construction.
“There are no early morning calls about a subcontractor not showing up or a rebar delivery that didn’t arrive,” Hahn said. “It frees me to do what I like.”
Moving forward, the team said it has enough land pieced together in the Indianapolis market to keep it busy for quite a while. When the projects are up and leased, Verus and MetLife will decide what to sell, hold and tackle next.
Theobald said Verus will be going after opportunities in other markets; locally, he’ll be keeping his eyes on activity in western Hendricks County and the Mount Comfort area.