Developer eyes Golden Triangle/NW Ohio

Rossford planned site of 700,281 sf new logistics facility

There is one place in the United States where the longest east/west interstate (I-80/90) crosses one of the longest north/south interstate highways (I-75). This location in northern Wood County has been called the Golden Triangle and its location is of strategic importance, especially for businesses where logistics play an important role.

The significance of this location has attracted a large national real estate and logistic development firm that is working to purchase property in Rossford, in close proximity to Bass Pro and to interchanges on both I-75 and the Ohio Turnpike (I-80/90). This location and the adjacent interstate highways are highly attractive for inbound logistics shipments. It is within a day’s drive of half of the US and Canadian industrial markets and 100 million people. For outbound logistics, there are approximately 6 million people within 100 miles distance.

The developer, Duke Realty Corporation, through its affiliated entity Duke Construction Limited Partnership, is headquartered in Indianapolis and has development properties and projects across the US. The company is an owner, developer, and manager of industrial properties that includes a specialization in bulk warehouses and large, efficient distribution centers.

Duke Realty has a unique expertise in supporting e-commerce businesses that has important potential benefits for northwest Ohio and southeast Michigan.

Rossford project

In mid-December, the Rossford Planning Commission, in its preliminary review session, unanimously approved a proposed site plan and two variances from Rossford’s zoning code. One of the variances involves approval to exceed the building height requirements of 35 feet. The Planning Commission gave preliminary approval to the developer’s request for the variance to permit the building to be constructed up to a height of 85 feet. The site plan approval process in Rossford is continuing to move forward.

The site is on the east side of Crossroads Parkway close to Deimling Road in Rossford. The property is physically behind the Home Depot and Target and other stores on the north side of Route 20 that connects Perrysburg to Fremont. The site consists of 100.296 acres of land.

The developer has not disclosed the name of the business that will occupy the new facility; however, there is speculation that it will be an Amazon fulfillment center.

Midland Agency of Northwest Ohio, Inc. is a trustee for the property. A sign at the edge of the large property indicates that it is for sale by Jerry Miller, CCIM of Miller Danberry Commercial Realty. Ford & Associates Architects, Inc. of Columbus and Mannik & Smith Group, Inc. of Maumee are providing services to the project.

The planned 700,281 square foot industrial facility to be constructed will be a tall building that may be as high as 85 feet. Parking is being planned at this initial stage for 1,809 cars including 39 ADA handicap spaces. The distribution facility will be able to service 300 delivery trailers.

Employment plans for this large facility indicate a minimum of 1,200 working 24/7 with the potential for additional hires beyond this level, according to speculation involving project plans.

At the recent Rossford Planning Commission meeting, a homeowner living near the planned site asked about roadway plans to address the significant increase in traffic that will occur. Nathan Harris, development services manager with Duke Realty responded, “There will be improvements to the roadway.” Rossford officials explained that details on these improvements would be provided by the time of the final site plan review.

Legacy Commerce Center in Linden, New Jersey

Duke Realty

According to Duke Realty, the company owns and operates 514 facilities with approximately 152 million rentable square feet of industrial space in 21 major U.S. logistics markets. It has a market capitalization of $10.2 billion, and at the end of September 2018, the business had $7.8 billion of assets on its balance sheet.

The company is a large industrial developer with aggressive growth plans. “Duke Realty will grow primarily through acquisition and development. We develop in all 21 of our major markets … but we will also acquire and do opportunistic acquisitions in markets where we really want to grow and indeed, grow faster than we can through the normal pace of development. We will continue to focus on growing our portfolio and our geographic footprint in those top markets around the country … and solving our clients’ needs wherever they might be in the United States,” explained Jim Connor, Duke Realty chairman and CEO.

Additional information from Duke Realty about its growth plans provides important insights. The company currently has over $1 billion of “dry powder”, which is its term for available investment capital for new development projects in the immediate future.

The project in Rossford has introduced this large logistics developer to the strategic significance of the Golden Triangle and northwest Ohio. There is a large amount of additional land available suitable for logistics development in the Golden Triangle and in other areas of the Region.

Within close proximity to Duke Reality’s Rossford site, the developer is able to see significant growth by other major logistics firms operating in this area. Walgreens has a major expansion underway on its large distribution facility in Perrysburg Township close to the Golden Triangle site which will take it from its current 650,000 square feet to 1.2 million square feet. In nearby Northwood, FedEx has two large distribution facilities within one mile of each other. Duke Realty’s second largest customer, UPS, has a large distribution facility in nearby Maumee next to an interchange on the Ohio Turnpike and with easy access to I-75.

In Wood County’s Troy Township, Home Depot has constructed a 1.6 million square foot distribution center that is completely devoted to servicing Home Depot’s e-commerce customers. There are quite a few other large logistics-related facilities that have selected sites in northwest Ohio and southeast Michigan.

Have the region’s many successes in winning major logistics-based projects, including Home Depot’s large e-commerce fulfillment center, played a role in Duke Realty and its client’s decision to select the Rossford site?

E-commerce

E-commerce is playing a critical role in Duke Realty’s growth and the company has had a focus on next day delivery and two-hour delivery for many years. “One major impact of increasingly immediate fulfillment is that commercial real estate providers must have well-located facilities close to major population hubs,” further advises Connor.

Duke Realty estimates that e-commerce business continued to grow in 2018 and has now captured 9.6% of all retail sales. The company projects that e-commerce sales will continue to grow at a rate of 15% annually, and that by 2020, e-commerce will be approaching between 10 to 15% of all retail sales.

Incremental SF needed for E-Commerce Warehousing (Millions)

Duke Realty also estimates that for every $1 billion of new e-commerce business, approximately 1 million square feet of new distribution space needs to be constructed. The company projected that in 2018, 66 million square feet of additional distribution space was needed for e-commerce and that this will grow to a need for 77 million additional square feet in 2019. Duke Realty further projects that in 2020 there will be a need for an additional 89 million square feet of e-commerce distribution space and that by 2021 there will be another 102 million square feet required. Thus, between 2018 and 2021, Duke Realty forecasted an increased need for 335 million square feet of additional e-commerce distribution space that will have to be constructed.

The 700,000 square foot Rossford project being planned will not be the company’s last project, but instead one of many that will take place during the next three years.

Customers

Duke Realty has over 1,000 customers that it currently services. Its top 10 customers account for close to 20% of its lease revenues and represent a who’s who in the distribution and e-commerce business. Its largest customer is Amazon representing 6.3% of the company’s lease revenues. UPS is its second largest customer at 2.5% of these revenues. Wayfair is the number three customer and represents 2.4% of this business. Other Duke Realty top 10 major customers include NFI Industries, Floor and Décor, Crate and Barrel, Target, Deckers, Home Depot, and HD Supply Inc.

17% of Duke Realty’s tenant base is e-commerce focused with 35% of the company’s development starts since 2013 being e-commerce based. The average lease size of a facility the company has put in place for e-commerce since 2013 is 503,000 square feet.

Other Duke Realty tenants with e-commerce needs include Walmart, Dick’s Sporting Goods, Best Buy, Kohl’s, Staples, FedEx, Grainger, Samsung, and others.

Projects

Since 2013, Duke Realty has completed 128 projects in which it has invested $3.4 billion. Half of these projects have been build-to-suit to meet the tenants’ needs.

The company has done 49 speculative development projects since 2013, which it initiated without a committed tenant, investing $1.1 billion. As of the end of September 2018, the company has leased 85% of the space in these spec facilities.

Will the region benefit not only from Duke Realty’s current development efforts in Rossford, but also future investment projects as it learns more about logistics and other benefits offered by northwest Ohio and southeast Michigan?