Behind the List with Patrick McBride
senior director of industrial brokerage services with Cushman & Wakefield of Pennsylvania Inc.
A: “Location, location, location” is a buzzword. But within that real estate buzzword, what really drives logistics decisions of companies that are looking to distribute throughout the Northeast (or) the Mid-Atlantic population of the United States and eastern Canada is the labor force (and) the ability to provide quality labor that is in a 30-minute drive time.
From a logistics story, Central Pennsylvania is virtually unparalleled. Within one day's truck drive, you can hit roughly 37 percent of the U.S. population and 56 percent of the Canadian population. That equates to 51.4 million households.
Not everybody needs overnight, but having that ability to get overnight makes it interesting for landlords and developers to locate buildings there because of the demand that's going to outlive the initial term. You want to make sure you've got a building on a long-term basis that is still going to be functional.
The configuration of the building is critical to make sure that it appeals to as wide a number of users as possible. That's why (First Industrial chose) the cross-dock design, which has loading on both sides, and ample car parking with 233 car (spots) and 232 trailer (spots). I think the design was key. We looked at 32-foot clear (height) and a state-of-the-art sprinkler system that allows companies to rack vertically as well as floor stack.
What was the level of interest in a space that size — 708,000 square feet — in a location like that, just off Interstate 83 in York County? And what industries were you focused on?
Our focus has been on, let's look at where we are in the economic recovery and what are some of the key industries that are starting to show real signs of life. The outlook of profitability for these industries is strong, so they are going to be investing in their supply chain for longer-term solutions.
One of those might be food- and beverage-related products. York County is the snack capital of the world. We had a natural focus on food and beverage companies and looking for companies that are on the move.
(Look at) the automotive world. I think there is a statistic out there that the average age of a car on the road right now is about nine years old. Historically, it's only been about six years old. There is the expectation that people are going to start buying new cars, but more importantly, people are using spare parts to keep their cars running. Those are the types of massive demographic trends that you try to get a handle on and what we try to be in front of.
The third area was e-commerce.
We had 23 different groups through the building. That group included consultants, so sometimes you don't meet the company, at least not right away.
Can you talk about the job potential for that site from the future tenant?
The projection was 120 to 130 jobs that would be created when this building is occupied.
They are working through the details of the operation and doing the layout (for the fit-out).
All I can say is it's distribution.
What does the First Logistic deal or deals like it say about demand for industrial product or Central Pennsylvania? What does it say about spec projects?
These are the good old days. Let me talk about deals greater than 500,000 square feet. If you look at the average over the last 10 years, on average you've got five deals per year that occur along the I-78/I-81 corridor. That's Northeast Pa., Central Pa. and the Lehigh Valley.
In 2012, we had seven deals greater than 500,000 square feet. In 2013, we had 11 deals, so double the average. That has resulted in absorption of a lot of vacant space or spec space that was built. It also reflects the amount of built-to-suit activity. So the deals are getting bigger. If you look at Procter & Gamble in Shippensburg, (you have) 1.7 million. Unilever in Newville (has) 1.4 million. Sizes of the deals are getting bigger as these larger corporations are right-sizing their distribution networks.
It's proof that Americans are back buying again and that the consumer is active. There is a need to distribute to the densest portion of the United States, which is the Boston to Washington, D.C., corridor.
About Patrick McBride
Patrick McBride joined Cushman & Wakefield in 2011 as senior director in the industrial brokerage group. He specializes in the Interstate 78 and Interstate 81 corridors, serving Central Pennsylvania as well as the Northeast and Lehigh Valley markets.
The Hampden Township resident has been in the real estate industry since 1990. In addition to industrial brokerage services, he has eight years of institutional portfolio management experience.
McBride received his bachelor’s degree in resources management from the U.S. Naval Academy in 1981 and served on active duty for eight years.
He and his wife, Leigh, have been married 33 years. They have two children.
Cushman & Wakefield, the world’s largest privately held commercial real estate services firm, has an office in Susquehanna Township. It also has offices in Conshohocken and Philadelphia.