Dec 16, 2005 - Playing off Dell, FedEx, builders race to prepare industrial sites
Oct 30, 2005 - Group buys Rock Creek park
Sep 16, 2005 - Local group buying Rock Creek, setting master plan

The Business Journal Serving the Greater Triad Area
From the December 16, 2005
Author: Clint Johnson

Playing off Dell, FedEx, builders race to prepare industrial sites
Most are calling it the Dell or FedEx effect. Whatever you want to call it, real estate developers in the Triad are jockeying for position as they sense increasing demand for warehouse and distribution space. They aren't all pulling the trigger to start construction, but developers are preparing building plans to start moving dirt as soon as a client comes along ready to offer a long-term lease on several hundred thousand square feet. So far, observers attribute much of the movement to more activity from prospective tenants trying to take advantage of the Triad's growing role in transportation and logistics. But developers are well aware that with the notoriety will come new competitors. "I think you will see local developers thinking of building as a defensive move," said David Hagan, president of Greensboro-based Hagan Properties. "It will be like a pre-emptive strike before national developers come in and secure land of their own." The signs of recovering demand for industrial space have become apparent over several months. CB Richard Ellis, the world's largest commercial real estate broker, came back into the Triad last year after leaving five years earlier due to sluggish market conditions. Liberty Property Trust, one of the region's most active developers, continues to put up distribution buildings in Eagle Hill Business Park off NC 68 in north High Point. Meanwhile, several developers have announced plans for buildings of up to 300,000 square feet. Highwoods Properties, the largest commercial property developer and manager in the region, has graded land where it says it is ready to start a 400,000-square-foot speculative building in Enterprise Park, which is near the airport. And in the background are the rumblings of a company that is considering Guilford County for an operation that would employ more than 1,200 people with its own corresponding space demands. Massie Flippin, vice president and Triad manager for Liberty Property Trust, said it is need, rather than sheer speculation, that is prompting his company to build things like the 150,000-square-foot facility going up in Eagle Hill, the fourth one the company has built in recent years in the same industrial park. "We make our decisions based on the sheer fundamentals in our portfolios," Flippin said, noting that his company is 100 percent occupied in the 1.6 million square feet of space it owns and manages in the Eagle Hill area. "It makes sense to bring on new product immediately. That was not a strenuous decision." Flippin said the newest building will reflect changing market demands by being about 50,000 square feet larger, with higher ceilings and deeper footprints than speculative buildings traditionally have been in this market. Forklift, stacking and picking technology have all improved so much that building heights have steadily moved upward. But, while Liberty's 150,000-square-foot building is larger than its norm, Flippin is not ready to match other developers' plans of putting up structures like Highwoods' pending building in Enterprise Park, Childress Klein's 304,000-square-foot building under construction in Union Cross Business Park, or Windsor Commercial Properties' announced 300,000-square-foot building in eastern Guilford County. "We won't be the first ones to dip our toes in that water," Flippin said. Rick Dehnert, director of Triad leasing for Highwoods Properties, does not yet have a starting date for launching his company's announced 400,000-square-foot building at Enterprise Park, but he said it is coming. "It is a great site, and we think the Triad's demand for distribution space is poised in the long term to really take off," he said. Highwoods has acquired buildings this large in the past, but this will be the first time the company has built one in this market. "We do a lot of market research all along the eastern seaboard, and we are seeing users move toward bigger footprints and more space under one roof," Dehnert said. The number of industrial developers competing in the Triad may get even more crowded in 2006, another indication that the market itself is strengthening. Though he declined to name them, Flippin thinks more national developers will open offices here. "You'll be seeing a fairly aggressive jockeying for position of all developers to find land that has good topography, which is close to the airport, which has no environmental issues, and which can accommodate large boxes," Flippin said. Hagan echoed Flippin's prediction that large national developers are poised to enter the market, which will result in even more construction. He said most local developers have plans for large buildings "ready to go, and they can pull those plans off the shelf and put them up quickly." 'On a short fuse' The region's hottest industrial market is perceived to be around the airport, but developers feel certain that other areas will attract their share of tenants. Richard Beard, a new partner with the renamed Simpson, Schulman and Beard, said their firm is proceeding with grading two places at Rock Creek Center, a large industrial site between Greensboro and Burlington. Both pads will accommodate buildings up to 320,000 square feet. He expects the company will start a speculative building by next spring, noting that an improving market takes much of the speculation out of the term "speculative building." "Everyone saw Dell and how fast its building went up," Beard said. "Other companies have the same sense of urgency. It takes so long to make a final decision on selecting a site that they want to be up and operating as quickly as they can once the site selection is made." Thus, it pays for developers to be prepared. "We are trying to take some of the steps out of the equation prior to them looking at the site," Beard said. "We are trying to compete on time. To companies, time is money." Beard said companies "that need to be within five miles of the airport" will not look at Rock Creek, but companies that need to be "in the airport area" will. He believes the park's location in Guilford County but outside a municipality's taxing district will be attractive, as will the fact that it is less than an hour to Raleigh-Durham International Airport. Dodson Schenck, director of the Triad region for CB Richard Ellis, said that his firm's return to the market "was a matter of seeing solid activity and filling in the dots between Atlanta and Washington." Triad getting more looks Economic developers in Forsyth and Guilford counties are happy with what they see. They are not at all wary that some announced buildings have not yet started construction because they are confident those buildings will take shape when they are needed. "There is not a lot of available space out there, so from a developer's perspective, this is a good time to be putting something up," said Bob Leak, president of Winston-Salem Business Inc. "We have some buildings that are over 300,000 square feet, but we could always use more." Loren Hill, president of the High Point Economic Development Corp., said he sees increased activity both from developers talking about buildings and from prospects talking about coming to the region. "We are dealing now with several clients from very large to more moderate-size (companies) considering expansion," Hill said. "We are seeing more activity now than we have seen in quite a while, particularly from companies coming to look for the second and third time." Dan Lynch, senior vice president of the Greensboro Economic Development Partnership, said developers are being competitive with each other without overbuilding. "Everyone is looking around for the next opportunity and trying to judge what the next product is going to be," Lynch said. "Given what has happened with Dell, and that Ted (Johnson, executive director of the Piedmont Triad International Airport Authority) is going to turn over the FedEx site to them early next spring, I think you will see a lot of buildings coming up out of the ground." FedEx and Dell are always the two projects that industrial property developers and business recruiters mention when predicting the need for more industrial space in the region. "You can't discount what that Dell announcement did for the region," Hill said. "That name has helped the Triad get attention. Other prospects are out there saying, 'There is a reason Dell did something that big, and we need to look at why that is.'" He also senses a difference in how serious they are about the Triad. "Now, when we are talking to people, we already know they have done their homework, eliminated a lot of places and we are high on their list," Hill said.

Greensboro News & Record (NC)
October 30, 2005
Author: Marta Hummel

Group buys Rock Creek park
For years Rock Creek Center, just off Exit 135 along Interstate 40/85 in eastern Guilford County, teemed with potential rather than business. The owners of the Triad's largest corporate park, a Tampa, Fla.-based pension fund, attracted businesses such as Konica and Carolina Biological Supply. But it did not succeed in turning it into another Piedmont Centre in High Point, home to about 200 companies and 10,000 workers. New owner Rock Creek Investments is out to change that. The investment group bought 680 acres from the pension fund earlier this month for $12 million with plans to turn around the property by building large spaces for manufacturers and distribution companies and selling land that would fit such plans. The owners also want to build a retail area that would include a grocery store, restaurants and a mid priced hotel. Richard Beard, a longtime site selection consultant who is now one of three partners in the deal, said his group plans to look beyond the Triad for firms. "We're trying to go out and market it to new people," Beard said. He and his partners, E. Samuel Simpson and Brett Schulman, have met with N.C. Department of Commerce officials and local economic developers to let them know what they have available. The group is willing to sell or lease land or space, they said. At one point the land was considered in the running for the Dell computer assembly plant. The company eventually built in Forsyth County. Local economic developers have complained that the region has a shortage of land and buildings suitable for large industrial customers. They also say that companies want to turn around a project within six months, which is nearly impossible unless the building already exists and land is zoned for the correct use. Simpson said Rock Creek's land is zoned and "everything is ready to go." And while it sits in a critical watershed , a lawsuit by previous owners blocked environmental restrictions arising from the building of the lake from being applied to the property. Don Kirkman, the president of economic developer Piedmont Triad Partnership, said the group's goals aren't unattainable. "It is very realistic of them to focus on out-of-market prospects. The location is very attractive off 40/85 - and it will continue to be in demand by manufacturers and distributors." Beard said the location puts it 53 miles from Research Triangle Park and 22 miles from Piedmont Triad International Airport. The partners said they do not see Rock Creek as a competitor with property near the airport because they see it as a better place for companies that move products by truck, rather than plane. They said the land also is priced about half of that near the airport.

The Business Journal Serving the Greater Triad Area
From the September 16, 2005
Author: Matthew Harrington

Local group buying Rock Creek, setting master plan
A group of Greensboro investors is purchasing the remaining 680 acres of Rock Creek Center in eastern Guilford County and will immediately begin grading two sites, with the possibility of putting up large speculative industrial buildings on both. The investors promise an aggressive marketing campaign of a prime chunk of real estate that has languished on the market in recent years, despite its attractive, high- profile location -- between Greensboro and the Triangle on Interstate 40/85. The partnership, called Greensboro Investors LLC, is led by Richard Beard, president of TMG Commercial Properties LLC and a former economic developer; and Sam Simpson and Brett Schulman, of the Greensboro commercial real estate firm Simpson & Schulman. There are also other local investors who are putting up money, though Beard declined to name them. Greensboro Investors is buying the property, which is on the south side of I-40/85 roughly between the Rock Creek Dairy Road and N.C. 61 exits, from the Firefighters and Police Officers Pension Fund of Tampa, Fla. It is the remaining part of the 1,800-acre Rock Creek site, which has been developed by individual companies and also had parts sold off for residential development. Beard, who has been working diligently to put the deal together for months, said it should close in a couple of weeks. He declined to say what the price would be. The land has a tax value of about $13 million, according to Guilford County tax records. The prime parcels include an 87-acre lot that fronts the highway, as well as an 80-acre lot that will be used for retail development. Starting with two sites Beard said his group would immediately begin grading two sites -- one 22 acres and the other 27 acres, and both in the interior of the park -- and will prepare those sites for speculative buildings of 250,000 square feet, expandable to 320,000 square feet. Landmark Builders of the Triad will be the general contractor for any spec buildings, Beard said. Greensboro Investors will likely wait to start the spec buildings until the 340,000-square-foot Rhodes Furniture distribution center in the park gets a user. Triad Commercial Properties is marketing that building, which became available after the furniture company filed for bankruptcy late last year. "Our strategy was to have a construction partner so that when a client comes through and needs a quick turnaround, we've got things set up and ready to go," Beard said. Area economic developers say that's key to landing a client who is ready to move on a project; overall, Greensboro and Winston-Salem have a low inventory of spec buildings to show industrial prospects. Stimmel & Associates of Winston-Salem is another "partner" in the deal, working with Greensboro Investors to provide a master plan that will split the remaining land into parcels from as small as 3 acres to as large as 80 acres, Beard said. The different size lots will allow the group to market the property to a wide range of users. "The primary focus is industrial warehouses," he said. "The county needs the industrial tax base." The group has also met with the N.C. Department of Commerce and is looking into making at least part of the site a designated Foreign Trade Zone, which could attract more international companies. Such zones allow foreign or domestic merchandise to enter without paying customs duties or government excise taxes. Additionally, state and local governments traditionally do not impose sales taxes or taxes on personal property in such zones. Aggressive focus Dan Lynch, senior vice president of the Greensboro Economic Development Partnership, said he's excited to have the park, one of the prime pieces of real estate in the county, under local control and looks forward to being able to market it as ready-to-go sites rather than undeveloped land. "This comes at a critical time for us as far as having shovel-ready sites," he said. "They're going to proactively develop some sites and get them ready to go." Greensboro and Guilford County have been hoping for developers to take a chance on speculative buildings, especially as more companies look for "ready-to-go" sites with infrastructure and utilities already in place, as they are at Rock Creek. "No one wants to wait anymore," Lynch said. While Rock Creek flourished in the 1980s and 1990s, landing companies such as Konica, Carolina Biological Supply and Legacy Furniture, the Florida pension fund which owns the park appeared to lose interest in it when the economy soured. The fund's members questioned why the fund was investing in speculative real estate in North Carolina. The fund stopped building speculative warehouses for potential tenants and activity at the park slowed down. "They had a lot of success with the speculative buildings that they built," said David Hagan, president of Hagan Properties in Greensboro. "That helped draw a lot of traffic through that industrial park." Back on the map But despite its attractive, high-profile location, the reputation of Rock Creek has suffered in recent years with site- selection consultants, said Rob Bencini, director of Guilford County Community & Economic Development. "It never made the cut list for sites because the basic infrastructure hadn't been put in place," Bencini said. "It might take a little time for this to get back on the radar screen of site- development people, but (the new owners) will do a good job." Beard, a former economic developer with the Greensboro chamber, said his group will offer build-to-suit, lease and lease/purchase deals as well as straight land sales. "We want to be very flexible," he said. "That's what will set us apart from other local developers," Simpson added. Hagan said that while Rock Creek was in a "very attractive" submarket, it will compete with other industrial parks and buildings across the region as more companies looking at the Triad are looking regionally rather than at one specific area. Still, he said he believes eastern Guilford County is "where the hot spot is going to be" in the coming years. Beard said he believes one advantage to Rock Creek will be land prices, which he said will likely be "four times cheaper" than land in the Piedmont Triad airport submarket. In addition, a Duke Power substation provides dedicated feeds in Rock Creek for users that require a large supply of energy. Hagan said the timing of aggressively marketing the park now is crucial. When the park was first being developed, "there were not a lot of support services in that area," he said. "To a certain extent, the cart may have come before the horse. With all the residential and retail development that's gone out there now, it's a vibrant submarket."