ABB Inc. – Single Tenant Office Development in Innovation Campus Research Park
ABB is a global leader in power and automation technologies. Based in Zurich, Switzerland, the company employs 145,000 people and operates in approximately 100 countries. The firm’s shares are traded on the stock exchanges of Zurich, Stockholm and New York. Represented by Studley, Inc. ABB sought proposals to meet the company’s divisional headquarter office space needs in the Milwaukee area. They required a highly visible location containing at least 80,000 SF (with the ability to expand), a quality development reflecting their brand value of sustainability and a compelling rental rate. Additionally they needed the space by May 2014 so temporary leased space could be vacated without further economic impact. Their Request for Proposal was issued in September 2012.
Zilber Property GroupSM (ZPG) was able to leverage several areas of its corporate skill set to meet and exceed ABB’s objectives. Using the extensive relationships established over the last 65 years we quickly identified the University of Wisconsin Milwaukee’s Innovation Campus as the research park setting that a technology-driven company like ABB would find extremely attractive. Concurrently ZPG engaged our internal design and construction staff to begin the site planning and cost estimating efforts so we could quickly address the development’s economics. ZPG also understood the community benefits of a firm like ABB and initiated discussions with the City of Wauwatosa regarding a public/ private partnership to recruit ABB. These initial efforts produced significant results. ZPG was able to secure a premier site at Innovation Campus, the City of Wauwatosa became an active partner in our recruitment efforts and the design and construction team produced a sustainable and exciting building concept. All of this was accomplished in time for the October 30, 2012 presentation to Studley/ABB. What is truly remarkable was that only about 18 months transpired between finalizing a Letter of Intent in December 2012 and ABB operating on site. This schedule is even more impressive when you consider that none of the research park infrastructure was in place when the lease was initially signed, the site was a highly regulated area and the focus of intense public interest and an aggressive public-private partnership agreement needed city council approval. ZPG was also able to accelerate the schedule since it is so well capitalized, and did not need bank financing in place to begin construction.
Zilber Property Group successfully organized and implemented a complex development program involving a university, several units of government and an active neighborhood association to produce a 90,000 s.f. LEED Gold, Class A Office Building. This was accomplished in a very short time frame so that the client’s aesthetic, financial and schedule needs were achieved. ABB’s new Regional Headquarters is a highly valued addition to Innovation Campus in Wauwatosa, WI and is providing a world class setting for ABB to continue its growth in this region.
Increase Zilber Property GroupSM holdings in industrial property within targeted geographic locations by acquiring properties that have the following investment characteristics:
- Opportunity to leverage Zilber Property Group’s successful operating platform of creating value through acquisition, leasing and managing properties
- Functional, relatively modern facilities with good interstate/highway system access
- Investment values below replacement costs.
- Partially occupied properties with upside potential associated with leasing vacant space
Zilber Property Group focused on product that was complimentary to its existing portfolio. Since the majority of its existing industrial portfolio accommodated companies with space needs in excess of 20,000 square feet, Zilber Property Group focused on properties that offered smaller industrial space solutions to tenants in need of approximately 5,000 to 20,000 square feet. Additionally, Zilber Property Group recognized that asset performance in this product type depends on its ability to retain existing tenants with service- oriented property management, as well as utilizing brokerage and business community relationships to attract new tenants to available spaces.
Working with its industry relationships, Zilber Property Group acquired 12 industrial multi-tenant flex buildings (representing approximately 500,000 square feet) that met its investment characteristic criteria within a 6-month period. These properties had average occupancy levels of 75% and were all located within areas in which Zilber Property Group currently had a marketplace presence.
Zilber Property GroupSM recognized an unfulfilled need for new construction industrial space among users with operations ranging from 15,000 SF to 85,000 SF in the I-94 Corridor, which connects the Chicago-Milwaukee Megalopolis. This demand came primarily from the existing base of small- to mid-sized businesses in the Northern metro-Chicago (IL) and Southern metro-Milwaukee (WI) marketplaces. Our experience indicated that users in this market segment had an appetite for new, functionally-designed facilities with high-cube height and energy-efficient building systems. In addition they required “shell-complete” buildings that facilitated quick-occupancy opportunities while still providing for an ability to cost-effectively customize office space design and process layouts. These companies ranged from entrepreneurial businesses to large corporations, but they shared the mindset that having quality, well-located industrial space was of significant value.
Zilber Property Group went about meeting this demand by acquiring 12 industrial sites (totaling nearly 70-acres) in established business parks ranging from 2- to 16-acres in size from multiple ownership groups over a 12-month period. These industrial sites served as the foundation for the organization’s market area projects that positioned Zilber Property Group to be a premier provider of new, available industrial space solutions for mid-sized industrial users. While these sites provided traditional build-to-suit or land sale deal structures common to mid-sized user market, Zilber Property Group also embarked on an aggressive spec building campaign targeting the needs of growing small- and mid-sized businesses.
Over the initial 24-months of the project investment, Zilber Property Group has successfully completed five speculative buildings (totaling over 300,000 SF) accommodating four tenants ranging from 15,000 to 80,000 square feet and sold an additional 9.50 acres of land to other companies. Although some of these transactions involved companies, which were already located within the area industrial submarket, Zilber Property Group experienced an unanticipated high-level of interest from companies outside the area looking to establish a facility, which could serve both the Chicago (IL) and Milwaukee (WI) marketplace.
Actuant Corporation: Electrical Segment Division, Sale Leaseback and Building Expansion
Actuant Corporation (NYSE: ATU), a diversified industrial company with operations in 30 countries, identified an opportunity to gain efficiencies by consolidating the operations of their Electrical Segment division into one building. The company selected an available existing 175,000 square foot building with adjacent land to accommodate expansion as the ideal location for this division. However, they desired to preserve their capital for investing in their core business, so they wanted an experienced developer to acquire the building on their behalf and lease it back to them. This developer would also need to be able to completely renovate 40,000 square feet of office and construct a 137,000 square foot building expansion. All of this needed to occur under an extremely tight schedule, allowing only three (3) weeks for due diligence and lease negotiations before closing. In addition, renovations to the existing building had to be completed within ninety (90) days of closing, and construction on the expansion had to occur during the winter allowing Actuant to begin a phased occupancy as leases at their other facilities expired.
Zilber Property GroupSM was able to utilize its real estate investment experience, development capabilities and industry relationships to meet Actuant’s objectives. We quickly assembled a full internal and external team to execute a strategy that involved completing all inspections and lease negotiations prior to contract execution, while simultaneously creating a development plan for the building’s renovations and expansion. In order to maintain Actuant’s occupancy schedule we needed to close on the building acquisition and structure an expansion option to provide Actuant flexibility as we proceeded further with design and certainty on final costs.
Zilber Property Group successfully completed the building acquisition and deal structure activities in less than the three (3) week time period. Construction on the retrofit and expansion were completed on schedule for Actuant to occupy prior to any of their lease expirations.
OHL: Towne Industrial IV at LakeView
OHL, a leading provider of global supply chain management solutions, was looking for a facility to consolidate several distribution centers across the country for one of its clients in the pool chemical business. The 300,000 square foot requirement was unique as 50,000 square feet of the product needed to be housed in an H3 classified space (given the technical nature of H3 buildings, OHL typically pursued build-to-suit transactions for this need). OHL’s objective was to find a location that would not only accommodate their physical space requirements, but also be advantageous from a labor and transportation cost perspective. Given its occupancy timing goals, OHL needed an existing building and could not wait for a build-to-suit project.
Zilber Property Group SM quickly developed a thorough proposal for OHL that not only involved the required real estate deal structuring, but also addressed the business environment and business park infrastructure needs of OHL. In addition, Zilber Property Group assembled a design/build team that could understand the technical needs of OHL’s use. We proposed cost-effective building modification solutions to a newly constructed 50,000 square foot speculative building that would accommodate OHL’s H3 storage portion of the overall requirement. Zilber Property Group also facilitated local governmental meetings with OHL, providing confidence that the project team’s approach would result in occupancy approvals.
Zilber Property Group successfully received approvals for, and completed, the necessary improvements to facilitate OHL’s occupancy. This included a complete construction of a dropped ceiling throughout the entire warehouse facility. In addition, Zilber Property Group was able to fund these significant above- standard improvements and include them in the overall deal structure which was a critical component of OHL’s requirement.