Construction of a more than 700,000-square-foot, high-profile logistics center in York County is under way after the project came under new ownership.
Chicago-based First Industrial Realty Trust Inc., no stranger to the Pennsylvania market, acquired the roughly 55-acre site between Interstate 83 and Bear Road in Manchester Township this summer.
The company's estimated total investment in First Logistics Center @ I-83 is about $34 million.
First Industrial quickly moved to start construction at the site after acquiring it, said Jeff Thomas, senior regional director.
It did so on speculation, Thomas said, meaning it did not have any users lined up when it started moving ground. The firm is still seeking its first taker.
But the market is ripe for this type of facility, he said.
Interest from firms looking for distribution space in the local market appears to have regained a pre-Great Recession level at the same time construction and development are not as robust, Thomas said.
The greater Interstate 81 corridor, including Interstate 83 and Interstate 78, is a very attractive alternative to the Interstate 95 corridor, which has tolling and is more congested, he said.
"We're sitting on the back door of the Eastern Seaboard," Thomas said.
The First Logistics Center @ I-83 site is only about a mile from Interstate 83 at exit 24; Baltimore's port is not far away; and the site has very good access to other area logistics infrastructure, such as intermodal facilities and parcel centers, Thomas said.
At the same time, the labor pool in York County is particularly deep compared with other areas in Central Pennsylvania, he said.
First Industrial expects the facility, once completed around the third quarter next year, could eventually employ between 150 and 400 people, depending on the final end users, Thomas said.
First Industrial also is actively seeking other opportunities in the region, he said.
Its work in the midstate already has already included, for example, a facility just north of its new development site now used by United Natural Foods Inc. and development of Church & Dwight Co. Inc.'s manufacturing facility in Jackson Township, York County, Thomas said.
In Pennsylvania as a whole, First Industrial owns and manages about 6 million square feet of space and has developed more than 9.4 million square feet of space in the state since 2000, the company said.
Also helping the publicly traded firm's position is that it is a real estate investment trust, which have been popular with investors in recent years because of returns they can offer.
This access to capital has helped many REITs, including First Industrial, weather the economic storm and now enables them to allocate money toward new investments to grow portfolios with improved asset quality, said Art Harmon, senior director, investor relations and corporate communications.
REITs must pass along at least 90 percent of taxable income to shareholders in the form of dividends. First Industrial has maintained its requirements, continuing dividends to preferred shareholders, but it has suspended common share dividends and undertaken debt repayment and investments, Harmon said.
It does plan to return to paying a dividend to common shareholders, he said.
The property's prior owner and developer gained township board of supervisors approval in 2010, said Stewart Olewiler, zoning and building code officer for Manchester Township. There was resident opposition to the plan that has since died down at public meetings.
A prolonged approval process and the unprecedented slowdown in the business cycle led Texas-based White Rock Commercial to consider selling the site once it gained approvals, said Patrick McBride, senior director with Cushman & Wakefield, who has worked with the former and current owners of the project.
Today there are "precious few sites" for projects of this size and caliber, McBride said.
"We think it will be a real plus for the local economy," he said.