Developers plan spec industrial on heels of new deals: More big leases are expected in coming months

Keywords Manufacturing
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For months, local industrial brokers have reported an uptick in activity from potential tenants in the modern bulk-industrial market. With the start of the second quarter, tirekickers seem ready to sign on the dotted line.

Three large-scale industrial deals in Plainfield kicked off the second quarter, prompting developers to release plans for more speculative bulk-industrial development this year across the metro area.

“The activity in the first quarter is setting up the second quarter for a lot of closings,” said Susan Wehrenberg, senior leasing representative for locally based Duke Realty Corp.

Three manufacturers recently cemented deals to relocate distribution facilities to Plainfield:

New Jersey-based Becton Dickinson and Co. plans to relocate and expand its northeast-side operations into a 640,000-square-foot facility along Reeves Road near State Road 267.

The deal won’t be officially announced until the company’s board votes on the new facility in late May, but those involved said the manufacturer of medical supplies and equipment plans to purchase land from the Indianapolis Airport Authority and contract for Duke to build the distribution center. It includes enough acreage to expand the facility to nearly 1 million square feet.

Becton Dickinson employs about 100 people locally, said company spokeswoman Colleen White.

In early April, Duke signed a lease with Nice-Pak Products Inc. to fill a 426,000-square-foot spec building the developer finished in January at Perry and Reeves roads.

Orangeburg, N.Y.-based Nice-Pak, which makes baby wipes and other household wet-wipe products, will consolidate four smaller facilities that serve the company’s manufacturing plant in Mooresville, said Jeff Castell, an industrial broker with locally based Colliers Turley Martin Tucker who represented Nice-Pak in the deal.

Georgia-based Southwire Co. will occupy 200,000 square feet of a building on Perry Road completed by Sacramento, Calif.-based Panattoni Development Co. last year. Southwire currently has a distribution center on the northwest side.

In line with central Indiana’s “build it and they will come” approach to industrial development, most major players in the market said they are gearing up to build more spec space.

Panattoni plans to start construction on a second spec building on Perry Road in May and plans to close on an additional 84 acres in Plainfield in June, said Mary Zurbuch, senior development manager for Panattoni.

Local developers Precedent Cos., Lauth Property Group Inc. and Browning Investments Inc., along with Minnesota-based Opus North Corp., have buildings in the works that would bring more than 2.4 million square feet of speculative modern bulkindustrial space to market by early 2006.

Lauth has broken ground on a 668,000-square-foot building in Greenwood, its first in the Southpoint Business Park. The developer also has a deal pending to sell its 405,000-square-foot Eagle Four building in Brownsburg, completed in June, to a single user, said Chris Alexander, vice president of Lauth’s industrial development group.

He declined to name the buyer, citing a confidentiality agreement. The deal is expected to close later this spring, he said.

Once that deal closes, it will pave the way for Lauth to start work on another spec building in Brownsburg, although construction might not begin on that building until next year, Alexander said.

A sale is also in the works for a 630,000-square-foot Mount Comfort Commercial Park building leased to Emerson Electric, Formica Corp. and S. Abraham and Sons (SAS) Inc. food distributors. AG Holdings Inc., an affiliate of Grand Rapids, Mich.-based SAS, has the building under contract, said Larry Siegler, Precedent’s vice president of commercial development.

SAS will continue to occupy about onethird of the building. AG Holdings will continue to lease most of the rest to the other two existing tenants, Siegler said.

Precedent also will begin erecting steel in coming weeks for a second bulkindustrial building at Mount Comfort that eventually could be expanded to 768,000 square feet.

Precedent’s buildings are the largest commercial buildings in Hancock County, an industrial market that has been slow to take off. Siegler said he believes that’s changing.

“The momentum we have now just legitimizes what we’ve been doing,” he said. “The brokerage community is finally realizing it’s a true market.”

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