As published in Toledo Business Journal - July 1, 2019
A Duke Realty facility near DFW International Airport in Dallas
In late May, the Rossford Planning Commission unanimously approved the final site plan for development of a large logistics facility. The developer of the project is Duke Realty, based in Indianapolis. The end user client for the project has not been disclosed, but speculation is that a large Amazon logistics facility will be built.
According to the company, Amazon is Duke Realty’s largest customer with slightly over 8 million square feet of space leased,or 5.7% of the company’s leased property portfolio. Duke Realty receives $39.1 million in annual lease payments from Amazon, which represents 6.2% of its annual revenues on its leased property portfolio.
On June 10, the Board of Education for Rossford Schools unanimously approved an Enterprise Abatement agreement with FC Toledo OH Landlord, LLC (a foreign limited liability company put in place for the Duke Realty facility) as part of the large logistics project. A property valuation for the constructed project will need to be completed to finalize the financials, but Rossford Schools will receive a minimum of $580,000 each year for the next 15 years. Depending on the final property valuation, this minimum figure of $8.7 million over the 15 year period could be higher. Construction will need to be near completion for these payments to Rossford Schools to begin.
“We are very excited about this project,” stated Dan Kreps, superintendent of Rossford Schools. He further explained that these funds will be used to support student needs and to assist in maintaining new facilities about to open. “We are also excited about the opportunity for new jobs and employment and new students that will come to the area.”
The location in Rossford’s Golden Triangle 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, 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.
According to the company, it has initiated 135 major development projects since 2013 in which $3.6 billion of investment has been placed. With half of these projects, Duke Realty has preleased over 50% of the space prior to completion of construction. 65% of the space it has developed during this period has been for existing clients to meet the needs of their growth.
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.
In late May, the Rossford Planning Commission unanimously voted to approve the final site plan for the project. Separately, the Wood County Port Authority approved a tax abatement incentive for the large project and extended an offer to Duke Realty. The Port Authority abatement would enable Duke Realty to save 5.75% on the cost of building materials for the facility’s construction as a result of avoiding most of the sales tax on purchased building materials that would normally be incurred. For example, if $50 million of building materials are purchased, a savings of close to $2.9 million would result.
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.
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 a Rossford Planning Commission meeting earlier in the year, 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.
There is also an expectation that there will be additional new investment in projects associated with the Duke Realty logistics facility. Large fulfillment centers around the country have lured suppliers and others to locate new operations in close proximity. A number of developers are working to position site options close to this location in Rossford to support the potential demand for additional facilities that want to be near the Duke Realty fulfillment center or that want to take advantage of this strategic location in the Golden Triangle.
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. There is industry speculation that the planned Rossford facility will offer rapid delivery capabilities.
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.
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.