‘Warehouses Support the Population’ Lessons Learned at the CRE Breakout Session ‘Industrial Sector: Surge or Hype?’ 4/7/17 04/07/17 8:52:56 AM
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From left: Speakers Denny Sciscoe, Brett Bosworth, Jon Meyers, Andrew Rainbolt, Jonathan Rudersdorf (obscured) and moderators Alex Epstein and Kevin Stratman presented a wealth of information about “Surge or Hype.”
‘Warehouses Support the Population’
Lessons Learned at the CRE Breakout Session
‘Industrial Sector: Surge or Hype?’
By Julien R. Fielding
The Daily Record
Is the industrial market as “hot” as everyone says it is? At the CRE Summit on March 24 in Omaha, a group of industry leaders came together to answer that question and more at the breakout session titled “Industrial Sector: Surge or Hype?”
Before giving the floor to his panel, moderator Alex Epstein painted a picture of the current state of the industrial market: There’s a lot going on right now, but because of the low vacancy rates, it’s a “challenge.”
Addressing the national market, Jonathan Rudersdorf, vice president of Prologis, explained that Amazon, which is his company’s largest customer (about 3 percent of its portfolio), builds big, specialized facilities. “They aren’t typical – one to two mezzanine levels – and they require heavy infrastructure,” he said. “Expansion is key.”
Omaha can’t really attract the same kind of client as can Columbus, Ohio, where Rudersdorf lives, or as can Chicago, said Denny Sciscoe, senior associate, industrial specialist at Cushman & Wakefield. “We don’t have those kinds of big users. Our average size user is 25,000-square-feet to 50,000 square feet; 100,000 is big. Companies want highway/interstate access, electrical hookups and large dock doors. One of the challenges [for Nebraska] is outside storage.”
Brett Bosworth, president of R&R Realty in Des Moines, said that tenants want to be close to where they live. “On the industrial side, it’s hard to find drivers for trucks,” he said. “A lot got out of the industry in 2009/2010, and they haven’t come back. Finding construction workers is also hard, and that drives up the cost. Most companies are looking for expansion capability; most are looking two to three years out, and will invest more in what they are doing. Leases are getting extended to keep lower rent. Efficiencies are becoming more and more important.”
Andrew Rainbolt, executive director, Sarpy County Economic Development Corporation, said that there are four projects underway in Sarpy County, including Thrasher’s 250,000-square-foot building at South 144th St., Oxbow Animal Health’s 247,000-square-foot building at S. 150th St., Freightliner Omaha Truck Center’s 180,000-square-foot facility at 14321 Cornhusker; and Blue Buffalo’s 160,000-square-foot warehouse expansion in Bellevue. And yet, Sarpy County has its own limitations, including its small workforce and its distance from the interstate. “We have a higher cost for infrastructure and we are a bit constrained,” he said. “We work with what we have.”
Jon Meyers, president of Nebraska Warehouse Company, said that Omahans don’t really want industrial in their backyard, because they think it’s unsightly and don’t want the trucks coming and going and yet, it provides healthy tax revenue.
“It supports a lot of people,” he said. “But the infrastructure has to be there, and someone has to build that warehouse.” That said, Nebraska Warehouse Company maintains older warehouses, and keeps them in good condition. That can keep prices lower.
Rudersdorf agreed: “Warehouses support the population.”
Omaha doesn’t have the population density that cities such as Chicago, Cincinnati, and Columbus do, but it has other things that they don’t, he added. “Omaha is successful and friendly. The perception is that it has a great conservative business environment, it’s a great place to raise a family and it’s one of the nicest places I’ve ever been.”
“We have a low vacancy rate,” Meyers said, “and we aren’t overbuilt. Our properties are nice. The public warehouse industry is strong in Omaha. However, it is tough to get drivers and the laws keep changing to limit driving time. You can only get so far in so many hours.”
“Casey’s has a home office in Des Moines, and they recently opened a new distribution center in Terra Haute, Indiana,” Bosworth said. “I’ve asked them about opening a location in Omaha, but they are moving East. Proximity is important.”
Nebraska needs more manufacturing sites, and should focus on agribusiness and the biosciences, Rainbolt said. “We aren’t Kansas City and it’s hard to compete with Des Moines, so we should focus on what we can do best.”
The “Industrial Sector: Surge or Hype?” morning session was one of many breakouts at the CRE Summit, an annual event that draws hundreds of people in the commercial real estate sector. Now in its 28th year, the Summit is an opportunity for professionals to earn continuing education credits and to network. The day began with a welcome and highlights overview by Jerry Slusky, founder. It featured breakout sessions on such diverse topics as pre-construction issues, industrial sector growth, and the explosion of multi-family dwellings, and concluded with the keynote speaker, Bill Rancic, an entrepreneur who won the first season of NBC’s The Apprentice.