Expansions, Relocations & Extensions (May 10-16): Ford Thinks Big, Builds Small
A Weekly Column of Major Corporate HQs Expansions, Relocations and Lease Extensions
May 13, 2009
In this week's issue:
Ford unveils its $550 million consolidation plan in Detroit
GSA renews a 310,000-square-foot lease near the Pentagon
ADP stays in its namesake building in Portland
U.S. Bank continues its southern California expansion
Marcum & Kliegman signs the largest relocation lease in Manhattan in 2009
Nike inks an 817,300-square-foot renewal in Memphis
Plus, we bring you news on: 8x8, American Music & Sound, Amerlux, AustinSuites Management, Beltmann Group, Burt's Bees, East Coast Power Systems, GR Sales, Guardian Container, Guralnick & Gilliland, Holland & Hart, I.C. Medical, Kaiser Permanente, New York State Department of Taxation and Finance, Pacific Medical Centers, People Care Holdings, Preferred Homecare, Renaissance Academy, Roseburg Forest Products, Sirva Relocation, Target Printing, Team Services, Thermo Fisher Scientific, Tire Centers and YRC Logistics.
As part of a continuing effort to reinvent itself amidst the financial crisis, Ford Motor Co. is spending $550 million to convert its Michigan Assembly Plant in western Detroit from a gas-guzzling SUV factory into a production facility for smaller, fuel-efficient cars.
Ford plans to relocate workers from the nearby Wayne Assembly Plant, and foresees about 3,200 employees building vehicles at the 2.9 million-square-foot Michigan Assembly Plant when production begins next year.
Once a manufacturing facility for the Ford Expedition and Lincoln Navigator, Michigan Assembly Plant will join two of Ford's other former truck factories in Louisville, KY, and Mexico, in producing six global small cars to be released over the next three years. The new lines will include the global Ford Focus model due in 2010, as well as the Focus BEV (Battery Electric Vehicle) - Ford's first all-electric passenger car - due in 2011.
The electric, zero-emission Focus, which Ford is developing with Magna International, will feature a high-voltage electric motor, powered by a lithium-ion battery. It was announced last month that Ford contracted Johnson Controls - Saft Advanced Power Solutions (JCS) to supply the batteries. JCS, along with A123 Systems, LG Chem and KD Advanced Battery, are building advanced battery manufacturing plants in Michigan to support the vastly changing auto industry.
Alan Mulally, president and CEO of Ford, said that the retooling of the automaker's Michigan facility represents a "larger transformation" at Ford. "This is about investing in modern, efficient and flexible American manufacturing," he said.
Ford plans to invest $430 million into manufacturing costs at Michigan Assembly Plant, with another $120 million for launch and engineering expenses. The upgrades will allow for all six new models to be produced in the same plant.
The state of Michigan, Wayne County and the city of Wayne have agreed to supply Ford with more than $160 million in tax credits and grants. Tax incentives will be made possible in exchange for a number of efforts, including job retention, Brownfield rehabilitation, and support of advanced batteries and new development programs. The plant will also be designated as Michigan's first automotive technology anchor site and receive tax incentives to bring technology suppliers to the state.
Michigan Governor Jennifer Granholm applauded Ford's efforts to further the American auto industry through superior technology and build strong partnerships with the UAW. Granholm's efforts - specifically $555 million in refundable tax credits - were a major force in bringing the four major battery developers to Michigan last month.
Gov. Granholm believes that investing in the renewable energy sector is the best way to create Michigan jobs, based on recent statistics. This week, she launched the "Green Today, Jobs Tomorrow" campaign, a $6 million investment aimed at increasing green business in the state. Currently, Michigan's Green Jobs Report showed that the state has more than 109,000 private sector green jobs, about 97,000 direct green jobs (jobs specifically involved in generating a company’s green-related products or services) and approximately 12,300 green support jobs.
From 2005 to 2008, a sample of 358 green-based companies added more than 2,500 jobs, which comes out to an expansion rate of 7.7 percent. That is a stark contrast to Michigan's total private sector average of negative 5.4 percent in the same timeframe.
"By investing in our work force, manufacturing infrastructure, and natural resources, we can make Michigan the state that helps end our nation's dependence on foreign oil and create good-paying jobs in the process," Granholm said.
By Andrew C. Burr
The U.S. General Services Administration signed a renewal for more than 310,000 square feet at the Jefferson Plaza office complex in Arlington, VA, the property’s owner, real estate firm Lowe Enterprises, said Wednesday.
The complex, comprised of twin 13-story towers that are interconnected, houses two U.S. Army divisions, according to CoStar Group information. The National Guard occupies virtually all of one building, while the Office of the Chief, Army Reserve resides in a smaller amount of space in the other building.
GSA considered relocation options in Virginia before signing the five-year extension, sources said. Charles Dilks, Kurt Stout and Keith Lavey of Grubb & Ellis’ Government Services Group handled the lease for Lowe, which is privately held and based in Los Angeles.
Formerly owned by Equity Office, Jefferson Plaza is one of the largest properties in Arlington’s Crystal City area, south of the Pentagon. The 550,000-square-foot complex was constructed in the late 1960s along Jefferson Davis Highway and is about 90 percent leased, according to CoStar. Other tenants include the defense firms Boeing and General Dynamics, and government technology contractors CACI International and EM Solutions Inc.
Lowe acquired the property a little more than a year ago from Beacon Capital Partners for $150 million.
The company, which has a large development arm, was forced to cut jobs recently, although it has several notable projects underway in the district. It is nearing completion on CityVista, a $200 million mixed-use complex near the Verizon Center, and is overseeing the renovation of the Washington Hilton Hotel.
Though vacancy continues to climb in the Washington area -- it is now above 14 percent for Class A office space, according to CoStar -- Dilks said government leasing inside the beltway has been “brisk” recently, as many experts had projected.
“There does seem to be an uptick in government activity over the past few months,” Dilks said, “much of it appearing to be net growth.”
Automatic Data Processing Inc. (ADP) has extended its 115,180-square-foot lease in its namesake building at 2525 S.W. First Ave. in Portland. KBS REIT signed the outsourcing services company to a long-term deal, slated to commence in January next year.
Tom Usher, Mark Carnese and Jeremy Neuer with Cushman & Wakefield represented the tenant. Scott R. Madsen and Jeff Falconer with Capacity Commercial Group handled negotiations for the landlord.
The four-story, 180,772-square-foot ADP Plaza was built in 1982 in the Barbur Boulevard/Capitol Highway submarket and received renovations in 1991. ADP has anchored the office property since 1984. Oregon Health & Science University (OHSU) also occupies space in the building.
"The ADP Plaza building has become a well-known downtown Portland landmark, and ADP is able to benefit from this name equity," said Steve Silva, senior vice president at KBS. He noted that KBS didn't need to offer ADP any special incentives to stay; the tenant was eager to continue its relationship with the REIT.
Silva advised that the Portland leasing market has held up well amid the recession, recording the fourth lowest office vacancy rate of all major U.S. cities at 10.2 percent in first quarter 2009 (the national average was 12.5 percent). "The continued attractiveness of the market combined with KBS’ aggressive tenant retention and property management programs have helped us to retain a significant portion of our long-term tenants in our three Portland-area properties," he said.
KBS purchased ADP Plaza in 2007 for $33.1 million, according to CoStar information.
By Amber Jagers
U.S. Bank National Association has leased 82,500 square feet from Maguire Properties at 3121 Michelson Drive in Irvine, CA. The bank will occupy the entire fourth, fifth and sixth floors for the next 10 years.
The lease continues U.S. Bancorp's expansion in southern California, where the financial institution has "gained tremendous presence in just the last year with the acquisitions of Mellon 1st Business Bank, Downey Savings & Loan and PFF," said Joseph Otting, vice chairman, commercial banking.
The six-story, 148,316-square-foot building was constructed in 2002 in the Park Place business campus, near John Wayne Airport.
Nick Christensen of CB Richard Ellis represented the tenant. Peter Johnston and Stephan Khudic represented Maguire Properties, in-house.
Nelson Rising, president and CEO of Maguire, said that his company has a "strong and longstanding relationship with U.S. Bank dating back to 2002 when they became a tenant at what is now U.S. Bank Tower in downtown Los Angeles and where they currently occupy nearly 165,000 square feet."
By Christina McKinnon
Accounting and professional services firm Marcum & Kliegman LLP leased 67,172 square feet from SL Green at 750 Third Ave. in New York. Move-in is slated for the fourth quarter.
The 10-year deal marks the largest relocation lease in Midtown Manhattan in 2009 to date.
The 34-story, 779-641-square-foot office tower, also known as Grand Central Square, was built in 1958. SL Green recently completed extensive renovations to the lobby, elevators and security systems. Additional tenants include Eisner LLP, Teachers Insurance & Annuity Association and Fairchild Publications.
SL Green is building out the 11th and 12th floors for Marcum & Kliegman, performing a turn-key installation that will provide "'plug and go' convenience with all work being performed on an accelerated construction schedule," said Steven Durels, executive vice president and director of leasing and real property at SL Green.
Newmark Knight Frank’s Neal Golden, Ross Perlman and Lee Brodsky represented the tenant. David Kaufman represented SL Green, in-house.
By Delphine Thomas
Nike Inc. signed an 817,274-square-foot lease renewal at 8400 Winchester Road in Memphis. The popular athletic shoe manufacturer will remain the building's sole tenant for another five years.
The Nike Distribution Center was built in 1982 in the Southeast Industrial submarket. It received renovations in 2003.
Brad Murchison and Tommy C. Jackson of CB Richard Ellis represented the landlord, Istar Financial Inc. Nike was self-represented.
Read Expansions, Relocations & Extensions First
Receive notice when a new Expansions, Relocations & Extensions column is published by receiving The Watch List newsletter. The Watch List is a powerful one-two-combination of both top-down macro analysis and bottom up micro real estate news, as well as valuable leads about companies expanding and contracting and property and loan investment opportunities. It is available for free by e-mail, which is the quickest way to review all of the news in the column as soon as it is published and link directly to the news and features you want. Just e-mail your name, title, company, company business, city, state, and e-mail address. Just click on the byline above or send an e-mail to Andrew Deichler or Mark Heschmeyer.
Expansions, Relocations & Extensions
8x8, a top provider of voice and video communications systems, has leased the 52,000-square-foot flex building at 810 West Maude Ave. in Sunnyvale, CA, from RREEF for three years. According to a filing with the SEC, the monthly rent is set at $46,512 for the first year, and escalates to $51,680 and $56,848 in the following years. Philip Mahoney and Rod Scherba with Cornish & Carey Commercial - ONCOR represented the landlord.
American Music & Sound signed a five-year, 100,527-square-foot lease at 4325 Executive Drive in Southaven, MS. The 552,066-square-foot distribution building that was constructed in 2006 on 37 acres in the DeSoto Trade Center. Daniel Wilkinson of Colliers Wilkinson Snowden represented the landlord; Hillwood Development Corp. Mike Driscoll of Colliers Wilkinson Snowden and David McGahren of Colliers Turley Martin Tucker represented American Music & Sound. (By: Lauren March)
Amerlux, a manufacturer of energy-efficient lighting systems, has renewed its lease of the industrial building at 19-21 Daniel Road E. in Fairfield, NJ. The 48,100-square-foot facility is near the Essex County Airport. Howard Weinberg and Matt Turse with Colliers Houston represented the landlord, Pan Realty. Cushman & Wakefield of New Jersey represented Amerlux.
AustinSuites Management Ltd. leased 18,700 square feet from Stream Realty at 700 Lavaca St. in Austin, and will occupy the entire 14th floor. The 314,886-square-foot office building was constructed in 1981 and is in the central business district. Rachel Coulter and Matt Frizzell of Stream Realty represented the landlord, Sentinel Realty Advisors Corp. Bill Anderson and Bill Wendlandt of Office Leasing Advisors represented the tenant. (By: William Trentzsch)
The Beltmann Group, a moving services company, has renewed its lease of the Buford Highway Distribution Center in Doraville, GA, nearly a year in advance. The 96,160-square-foot facility delivered in 1999 in the Doraville Industrial submarket. John Crawford and Ray Dankberg with Grubb & Ellis handled the transaction.
Burt's Bees, a personal care products company, and mobile content provider Motricity have swapped Durham offices. Burt's Bees signed a three-year lease to occupy Motricity's former headquarters space, the 71,156-square-foot Hill Building at 210 W. Pettigrew St. Motricity is downsizing and signed a three-year sublease for 26,000 square feet at Burt's Bees former headquarters location, at the Tech IX building in the Keystone Technology Park. Richard Harris and Dave Harris of Synergy Commercial Advisors represented the landlord in both transactions. John Stubbs of Jones Lang LaSalle represented the tenant in both transactions. (By: Carl Baker)
East Coast Power Systems acquired the industrial building at 101 Tornillo Way in Tinton Falls from Patock Construction Co. for $4.6 million, or about $50 per square foot. The 92,345-square-foot warehouse was built in 1967 and renovated in 2001. East Coast Power Systems leased the building in February and has moved all of its employees to the location. The panelboard and switchgear manufacturer plans to expand the facility to 120,000 square feet. Barry Kantrowitz and Michael Granucci of Barry Associates LLC represented the buyer and the seller in the transaction. (By: Heather Berwanger)
GR Sales Inc. leased the 125,785-square-foot industrial building at 13217 S. Figueroa in Los Angeles for nine years. The lease totaled a little more than $4.5 million. Formerly occupied by Unisource Distribution, the building will now serve as GR Sales’ worldwide headquarters. Terry Reitz, Jim Biondi and Gerald Kim of Grubb & Ellis represented the owner, Del Vista Village LP. Richard Abdulian, also of Grubb & Ellis represented GR Sales. (By: Joshua Weekley)
Guardian Container leased 18,320 square feet at 1099 Proctor Drive in Elkhorn, WI. The 41,320-square-foot flex building was built in 1990 in the Walworth East Industrial submarket. Vytau Barcas and John Henderson of NAI MLG represented the private landlord. Dave Hazenfield of The Dickman Co. represented Guardian Container. (By: James Lutz)
Guralnick & Gilliland, Attorneys at Law, purchased the office building at 40004 Cook St. in Palm Desert, CA, from a private investor for $3.4 million, or $157 per square foot. The buyers are performing tenant improvements and plan to occupy most of the space while leasing out the remainder. The 21,617-square-foot office building was built in 1979 at the southeast corner of Cook Street & Country Club Drive, beside the Lakes Country Club. John Marshall of Baxley Properties represented the seller in the transaction. (By: Selamawit Kidane)
Holland & Hart LLP, one of the largest law firms in the Mountain West, leased 24,143 square feet at the Village Center Station I in Greenwood Village, CO. It will take occupancy on the fifth floor in July. The 200,174-square-foot office building at 6380 S. Fiddlers Green Circle is currently under construction and due for completion next month. The Grubb & Ellis team of Tim Harrington, Jeff Caldwell, Ryan Stout and Nate Bradley represented the landlord, Shea Properties, and Jim McGrath of Studley represented the tenant. (By: Tajuana Richardson)
I.C. Medical Inc., a developer of surgical smoke filtration systems, purchased the flex building at 2340 W. Shangri LA Road in Phoenix from Brooks Automation for $1 million, or $53 per square foot. The 18,746-square-foot light distribution facility was built in 1986 in the North Black Canyon Industrial submarket. Andrew Cloud with Grubb & Ellis|BRE Commercial represented the buyer. John Soldo, Evan Koplan and Mike Parker with Colliers International represented the seller. (By: Tomalina Pacheco)
Kaiser Permanente leased 17,083 square feet at The Quad at Lowry in Denver. The healthcare provider is scheduled to occupy the space this August. Kaiser already leases 34,628 square feet in the building and the expansion will bring its total square footage in the building to 51,711 square feet. The four-story, 135,499-square-foot office building at 7901 E. Lowry Road was constructed in 2000 in the Glendale submarket. Michael Gregory and Paul Keilt of Jones Lang LaSalle represented Kaiser Permanente. Scott Garel of Frederick Ross represented the landlord, Schomac Group Inc. (By: Charles Fish)
The New York State Department of Taxation and Finance renewed its 35,965-square-foot lease at the Rye Brook Plaza. Located at 90 S. Ridge St. in Rye Brook, NY, the two-story office building totals 80,000 square feet and was constructed in 1985. Kevin McCarthy and William Cuddy of CB Richard Ellis represented the owner, Abbey Road Advisors. Kerry Maloy of United Systems Integrators Corp. represented the tenant. (By: Brooke Koch)
Pacific Medical Centers leased 30,000 square feet in Building One of the Woodlands Technology Center in Bothell, WA. The three-story, 85,000-square-foot office building at 1909 214th St. S.E. delivered in 2007. Pacific Medical Centers plans to open a new branch at the location in January 2010. Scott Davis with CB Richard Ellis represented the landlord, TIAA-CREF. Al Hodge with Broderick Group negotiated for Pacific Medical Centers.
People Care Holdings Inc. renewed its 23,500-square-foot lease at 116 W. 32nd St. in New York. Pam Am Equities signed the health care services provider for another 11.5 years. The 16-story, 204,953-square-foot office tower was built in 1912 in the Penn Plaza/Garment submarket. Jeff Rosenblatt of Helmsley Spear represented the tenant. David Iwanier represented Pam Am Equities, in-house. (By: Christina McKinnon)
Preferred Homecare, a home healthcare products and services provider based in Arizona, signed a five-year lease for 17,519 square feet at 3554 Ruffin Road in San Diego. The deal is valued at $1.4 million. The 44,640-square-foot property is in the San Diego Business Center, a 10-building flex/light-industrial park in the Kearny Mesa area. Bill Dolan and Rob Merkin of CB Richard Ellis represented the landlord; H.G. Fenton Co. Preferred Homecare was self-represented. (By: Steven Ferreira)
The Renaissance Academy Charter School purchased a 105,000-square-foot office unit at Franklin Commons in Phoenixville, PA, from a private seller for $5.16 million, or about $50 per square foot. The Academy joins a number of educational institutions at Franklin Commons, including colleges, a graduate school, a music academy, and a drama school. Located at 400 Franklin Avenue in Phoenixville, PA, the 225,000-square-foot office building was built in 1965. Formerly an industrial building, Franklin Commons was converted to office in 2008. (By: Michael Nylund)
Roseburg Forest Products Co. purchased the industrial building at 93747 S. Highway 99 in Junction City, OR, from Weyerhaeuser for $3.1 million, or about $20 per square foot. The 150,000-square-foot warehouse was built in 1965 in the Lane County Industrial submarket. Clayton Walker of CW Walker & Associates represented the buyer. (By: Travor Chapman)
Sirva Relocation signed a 27,657-square-foot renewal at Plymouth Woods I in Plymouth, MN. The three-story, 85,322-square-foot office building at 3300 Fernbrook Lane was built in 1998 in the I-394 Corridor. It is part of the Plymouth Woods Office Center. Sirva Relocation is a leading relocation and moving services firm, operating in over 175 countries worldwide. Robert Revoir and Greg McMillan of Northmarq represented the landlord; St. Paul Properties. Kurt Knoff and Emily Nicoll represented the tenant. (By: David Parks)
Target Printing, Target Group's in-house printing division, signed a six-year, 86,941-square-foot lease at 9210 Wyoming Ave. N. in Minneapolis. The 213,734-square-foot manufacturing building was built in 1996 in the Crosstown Business Center. Scott Moe represented the owner, Duke Realty Corp., in-house. Peter Keewaydin, of Keewaydin Real Estate Advisors, represented the tenant. (By: David Egbert)
Team Services, a payroll firm for the entertainment and music industry, leased 20,442 square feet of office space at 901 W. Alameda Ave. in Burbank, CA. Move-in is scheduled for September. The 88-month lease is estimated to be worth more than $4.4 million, according to a broker close to the deal. Rene Soto and David Kutzer of Newmark Knight Frank represented Team Services. Christopher Baer and Branden Moll of Ramsey-Shilling Commercial represented landlord, Rexford Industrial. (By: Keith Dornin)
Thermo Fisher Scientific Inc., signed a five-year renewal at 9389 Waples St., where Molecular BioProducts, one of its subsidiaries, fully occupies the property. The 102,211-square-foot industrial building was completed in 1990 in the Pacific Business Park. Linda Greenberg of Colliers International represented Thermo Fisher in the renewal. James Duncan and Mickey Morera of Cushman & Wakefield represented the landlord, RREEF. (By: Adrian Robles)
Tire Centers Inc. leased 42,400 square feet at 16800 W. Ryerson Road in New Berlin, WI. Occupancy is scheduled for July. Built in 1977 in the Brookfield/ New Berlin Industrial submarket, the 206,052-square-foot distribution facility is on nearly 14 acres. Scott Furmanski and Roger Siegel of CB Richard Ellis represented the landlord, CenterPoint Properties Trust. Jeff Horn of Grubb & Ellis|Apex Commercial represented Tire Centers. (By: James Lutz)
YRC Logistics leased 120,800 square feet at the Turnpike Distribution Center One in Galilee, PA. The logistics services provider is scheduled to take occupancy in June. The 410,000-square-foot facility at 1750 Shenango Road delivered in 2007 in the Beaver County Industrial submarket. Richard Gasperini of CB Richard Ellis represented the tenant. Louis Oliva of Grubb & Ellis represented the private landlord. (By: Nancy Ryan)