Category: News

Hard Hat Construction Area-World Wide Technology-Status Update 5/5/19


Location of new facility outlined in red

World Wide Technology

  • 1,012,960 sq. ft build-a-suit warehouse/distribution center
  • 36′ clear height
  • 54 dock doors
  • Approximately 7,000 square feet of aluminum storefront
  • Shell upgrades for 60,000 square foot Tenant Mezzanine

 

Completed-Main-Entrance

 

Industrial Bulk Distribution Development Momentum Continues, Fueled by E-Commerce

By Kerry Smith, Editor – St. Louis Construction News & Review Magazine

Speculative industrial warehouse and distribution construction remains alive and well across the St. Louis MSA, as evidenced by the 769,000-square-foot “Building 5” in Lakeview Commerce Center that is anticipated to reach completion this summer.

Kadean Construction of Fenton is building Building 5, located in the 750-acre bulk distribution park in Edwardsville and Panattoni Development is the owner-developer. Mike Eveler, Kadean’s president, said the construction project includes 80 loading docks with clearing heights of 36 feet.

“This is the second building we’ve built recently at Lakeview Commerce Center,” Eveler said. “In addition to constructing Building 5, we built its sister building, Building 4, which is 769,000 square feet and is occupied entirely by Amazon.”

Although Building 4 was completed in 2017, according to Eveler, Amazon is already performing technology upgrades to keep pace with the latest advances in fulfillment/distribution technology.

“In 2018 they’ve (Amazon) invested approximately $23 million worth of tenant improvement work (in Building 4) as well as heavy and electrical distribution,” he said. “Much of this investment has been related to robotics within the facility to hold the product and move it around.”

As the dynamics of e-commerce order fulfillment improve nearly as quickly as consumer order-and-delivery expectations do, serving these industrial clients is also a dynamic process, according to the Kadean exec. “About six weeks ago, Amazon contacted us to request additional work specific to fulfillment robotics,” Eveler said. “We’re already tearing out some of what we’ve built (internally) to help them upgrade. “Just their robotics system upgrades represent about $1 million worth of work,” he added.

Kadean Construction works in tandem with Panattoni Development in other industrial parks across the St. Louis MSA such as Aviator Park in Hazelwood – the 165-acre park on the site of the former Ford Motor Co. manufacturing plant at Lindbergh and Interstate 270. Mark Branstetter, partner at Panattoni, said his firm has developed approximately 1.7 million square feet in Aviator and still have equally that much capacity for future development.

“We are about halfway through developing Aviator,” Branstetter said. “It’s interesting…although Lakeview and Aviator are relatively proximate – some 12 miles from each other – their respective user groups are markedly different. Lakeview in Edwardsville attracts the larger, regional distribution centers whereas Aviator in Hazelwood attracts more local infill.”

Although e-commerce is a prominent driver of bulk warehouse and fulfillment development nationally and regionally, Branstetter said e-commerce isn’t the only factor propelling the construction of these types of buildings. “A big topic that gets published is indeed e-commerce,” he said. “It’s certainly a big trend, but it’s not the sum total of what’s driving development in this industry sector. E-commerce is actually a very late trend, just in the last decade or so. Everyone is trying to optimize their supply chain, be it location or size orientation. But once they’ve optimized these locations across the country, companies are then working on optimizing the inner workings of their processes, again with the consumer at the forefront.”

Reprinted with permission from St. Louis Construction News & Review Magazine

Gateway Commerce Marks 20 Years, 15 Million Square Feet of Bulk Distribution Development

By Kerry Smith, Editor – St. Louis Construction News & Review Magazine

As Gateway Commerce Center celebrates the 20th anniversary of the arrival of its very first warehouse-distribution tenant, developers of the 2,300-acre bulk distribution park in Madison County, IL are reflecting back on its genesis, its progress and its unique space in the market.

April 2018 officially marks two decades from the park’s official opening.

TriStar Companies is the park’s developer and has been since day one. The idea for creating the large-scale development emerged from the mind of Rod Thomas, TriStar chairman, according to Michael Towerman, the company’s president.

“This was absolutely Rod Thomas’ vision from the beginning,” Towerman said. “We first began assembling the land in September 1996. The first transaction was signed in April1997, and that was the Dial (Corp.) lease. Dial was our first tenant at the park and opened in April 1998. Dial remains with us today.”

With regard to sheer capacity, Towerman says Gateway Commerce Center has built 15.25 million square feet of development with the capability to facilitate a build-out of approximately eight million more square feet. “Our tenant size usually ranges from 350,000 square feet on the low side to 750,000 square feet on the high side, though we have buildings as large as 1.3 million square feet,” he said. “We also have some smaller capacity available.”

Putting Gateway Commerce Center in context with the St. Louis MSA’s various offerings in terms of bulk distribution sites, Towerman says in 2017 approximately four million square feet of new bulk warehouse space was built. “If we (Gateway) got 100 percent of the market, we’d be full in two years, but that’s not going to happen. As long as we don’t get an economic downturn, our submarket will continue to attract about 500,000 square feet to 750,000 square feet per year, maybe a little bit more. Some readers may think I’m a bit pessimistic, but (former Federal Reserve Chairman) Alan Greenspan said a few years ago that we’re living in a period of ‘irrational exuberance.’ That’s kind of how I feel now about where we are. The bell doesn’t go off before a downturn. It takes eight months to develop an industrial building, and two to three years to build and lease an apartment complex. If you started (construction) when you thought the market was pretty good, it’s almost like, ‘Gee, I think I built one or two too many’ at some point. That’s the speculative nature of what we do,” he added.

Amazon’s ambitious development of fulfillment centers in Gateway Commerce Center and elsewhere is an anomaly rather than the norm, according to Towerman.

“While e-commerce has driven a lot of construction and leasing over the last four years, if you take Amazon out of the St. Louis market, you take out 1.5 million square feet to 1.9 million square feet – or about 2.75 million square feet of absorption – out of the equation,” he said. “If you subtract that number out of what has been built in St. Louis over the last couple of years, you’d see a very different picture.”

One commercial construction company that has and is building a significant amount of product in Gateway Commerce Center is Edwardsville-based Contegra Construction. The firm has built more than 4.8 million square feet in Gateway Commerce Center, and by the close of 2019, the contractor will have completed 6.8 million square feet in the park. Contegra President Eric Gowin says his company has built four bulk distribution projects in a row within Gateway Commerce Center and is the shell building contractor for two million-square-foot buildings that are currently under construction within Gateway for World Wide Technology, both of which will be completed next year.

“We’ve been building and leasing these projects one at a time for TriStar,” Gowin said. “We adjust each for the site and according to marketplace demand at the time. Each is similar in size and scope. We’ve been replicating what’s been working in meeting the demand.”

Towerman says there’s no doubt that e-commerce is the key driver. A still-expanding U.S. population of consumers buying online and expecting their goods to be delivered more quickly that ever before adds up to the certainty of a flourishing demand for warehouse space well into the future, he added.

“Another factor is aging warehousing stock,” Towerman said. “In the Northeast, there’s an old supply of warehouse space,” said Towerman. “The average age of warehouse facilities in the Northeast is much older than in the Southwest or Midwest. Thus, those older facilities don’t work as well. They don’t offer the specifications necessary for e-commerce such as 36-foot ceiling clearance heights, compared to 28-foot heights which had previously been the norm.” The older buildings in the Northeast, built in the mid-1990s, have ceiling heights ranging from as low as 15 feet to 22 feet, he said.

Towerman references a study performed in September 2016 by real estate logistics expert Prologis that reveals online retailers need approximately 1.2 million square feet of warehouse space per every one billion dollars of online sales – three times the distribution center space required for traditional brick-and-mortar retailers. According to Prologis’ research, there are four unique business characteristics of online order fulfillment that are driving this space requirement: extensive product variety, greater inventory levels, larger outbound shipping space requirements and increased reverse logistics (also known as process returns).

“We (Gateway Commerce Center) will continue to see an increase in warehouse demand until we hit a saturation point,” Towerman said. “I think as long as there are no macroeconomic eruptions – such as wars and trade wars – I think we’ll see continued expansion in industrial bulk distribution warehouse development. We’re not a port town, we’re not Atlanta or L.A., but we get our share of development. We have our place in the supply chain but we’ll never see the peaks and valleys.”

According to the State of Illinois’ Dept. of Commerce & Economic Opportunity, Gateway Commerce Center’s enterprise zone – an economic incentive sanctioned by the state, Madison County and local municipalities that offers companies to apply for property tax abatement, sales tax exemption and more as an incentive to locate, expand or retain their presence in the park – is one of the most successful enterprise zones in the state, as measured by total number of jobs created and real estate investment.

Reprinted with permission from St. Louis Construction News & Review Magazine