Key to success
It wasn't hard to understand why Pepsico zeroed in on Brennan Investment Group's Lakeland distribution center last year when it sought space in Central Florida.
In addition to its central Polk County location, the Centerstate Logistics Park featured 36-foot-clear ceiling heights, and an ultra-smooth concrete floor that would allow efficient material stacking.
But perhaps the park's best attribute, as far as Pepsico was concerned, was size: At 605,000 square feet, Centerstate's inaugural building represented the largest fulfillment space available along the Interstate 4 Corridor or throughout the Gulf Coast.
In October, the soft drink and food conglomerate leased the entire building.
Now, Blue Steel Development and commercial real estate brokerage firm JLL are hoping size will be the key to their own success at the Key Logistics Center, which is about to start construction on its first building in Lakeland.
Like Brennan, Blue Steel's project will result in the largest speculative industrial building on the market, at 520,000 square feet and expandable to up to 1 million square feet under roof.
JLL Senior Vice President Ryan Vaught, who is leading the effort to lease Key Logistics Center, notes that there are no industrial spaces above 400,000 square feet available currently in Central Florida.
“If you were a company that had a 400,000-square-foot industrial requirement and you wanted to be in the I-4 corridor, there's not a single existing site that you could go to,” Vaught says.
“So we want to be the first out of the ground, with the largest building available, to be ready for the next major fulfillment center that wants to be in our area.”
Vaught adds that building spec — as Brennan did, as well — also will provide a competitive advantage because potential users won't have to wait for their building to be designed or constructed.
Marcobay Construction Inc. of Lakeland is demolishing existing buildings on a 155-acre business park site now, and hopes to have its first building completed at the 5300 Allen K. Breed Highway site in May, Vaught says.
“Very few sites can handle one million square feet under a single roof, it's a pretty short list,” he says. “And from a timing standpoint, we'll be competing with developers who own plots of dirt while we have a building up. We believe speed will be the key here.”
Vaught adds the property's location — adjacent to a massive Amazon fulfillment center and near those operated by Publix Super Markets Inc. and Southern Wine & Spirits — will also give Key Logistics Center an edge.
Blue Steel, led by Matt Tucker, has been working on the development since it and joint venture partner Pacific Coast Capital Partners bought the property for $5 million last year from Key Safety Systems.
As part of the deal, Blue Steel had to promise to build Key Safety, which makes components for automobile air bags, a new 40,000-square-foot facility on roughly 100 adjacent acres.
Like Brennan, Blue Steel's spec building will feature 36-foot-clear ceiling heights, have high-tech ESFR sprinkler systems, abundant trailer parking on site, and other modern distribution features.
Blue Steel is asking rent of $4.95 per square foot on a triple net basis, which means tenants will be asked to pick up the tab for utilities, taxes, maintenance or other expenses associated with the building.
The developer decided to go spec on Key Logistics Center after finding success at another project, in Tampa.
Crossroads Commerce Center, a 71-acre tract Blue Steel began working on in December 2016, is today 50% sold out. NewSouth Window Solutions and Colonial Grocers spent a combined $21.8 million to acquire a pair of build-to-suit projects totaling 351,000 square feet there.
With a pair of pad sites ready for an additional 293,000 square feet, Blue Steel and the JLL team decided to shift its emphasis to Key Logistics Center.
In addition to the 1 million square feet it could construct in a single building at Key Logistics Center, the company also has plans for another 350,000-square-foot structure, Vaught says.
He's confident it'll all be filled in the near term.
“It's not an isolated trend we're experiencing,” he says. “The industrial users in the market are larger, because what we're seeing is less a distribution trend than a supply-chain trend. Companies are using their industrial space today almost as retail centers. And in a state of 20 million people, distributors are finding they're going to need a larger presence here.”
(This story was updated to reflect the names of other leaders within Blue Steel. This story was also updated to reflect the size of the Key Safety facility.)