Despite recession, more than 1 million square feet of industrial space built in region in past year
Story by Sean Fitzgerald
SOFTENING IN THE REAL ESTATE and construction industries hasn’t just been confined to the housing and commercial office/retail markets during this deep recession.
Industrial real estate has been reeling in many parts of the country as factories shutter their doors and manufacturers scale back expansion plans.
Yet, the Fox Valley region has experienced ample rays of sunshine during the past two years, with more than 1 million square feet of new industrial space constructed, adding hundreds of new jobs and millions of dollars in local property tax revenue.
Even after considering all of this growth, vacant manufacturing space still isn’t widely available across the region. According to Grubb & Ellis/Pfefferle’s Industrial Market Trends Report for the fourth quarter 2009 – the most recent report available – vacancy rates for industrial and warehouse properties across the Fox Cities and Oshkosh are near 11.1 percent, down from almost 12 percent during the first six months of 2009.
What follows is an in-depth overview of some of the prominent industrial developments occurring in the Fox Valley since the recession began in mid-2008.
The stars shine bright in Fond du Lac
EVEN THOUGH INDUSTRIAL and commercial construction has appeared to grind to a halt in many places during the past two years, Fond du Lac has been fortunate to continue seeing more industrial space added to its tax rolls.
During 2009, Minnesota-based McNeilus Steel Inc. built a 112,000-sq. ft. distribution center and offices in the city’s Southwest Industrial Park, while at the time indicating that it hopes to someday expand to double the size of its facility on its 17.6-acre site abutting the Canadian National railroad line.
Chicago Tube & Iron built a 117,000-sq. ft. distribution center and offices during 2009 as well, becoming the first resident of the city’s new Fox Ridge Business Park. The 276-acre industrial space, located on the city’s far south side at the newly constructed interchange of U.S. Highways 41 and 151, offers critical transportation access and visibility to businesses situated at the site, said Wayne Rollin, community development director for Fond du Lac.
During late 2008, the city developed the northern 110 acres of the business park, spending about $2.5 million to install streets, lighting, water and sewer, and natural gas and electrical infrastructure. The development of Fox Ridge came as Fond du Lac’s existing industrial parks were approaching capacity – just a few small lots remain in its Southwest Industrial Park, which was developed in 1991.
The last remaining large, 12-acre lot in the Southwest Industrial Park is currently reserved for Green EnviroTech Corp., a start-up firm interested in building a 120,000-sq. ft. recycling facility on the site later this year.
Even though no larger lots exist in the industrial park – which now can access highways 41 and 151 through three separate freeway exits – there’s still been a good deal of growth in the park, with Marchant Schmidt Inc. building an additional 20,000 square feet to its existing facility in late 2008. Earlier this year, Muthig Industries wrapped up a 10,000-sq. ft. expansion of its existing metal fabrication shop.
During the past month, Canadian-based Central Wire Industries announced plans to set up shop in the former Charter Specialty Steel plant in the Southwest Industrial Park, which Charter closed down in early 1999. Central Wire plans to create 30 new jobs when it’s up and running by the second half of 2010. Coupled with the retention package put together to help Mercury Marine maintain its operations and expand in future years, it’s been a productive year for Fond du Lac.
“It’s been immensely gratifying to see this happening at such a grim time in the economy,” Rollin said.
Just outside the city’s boarders, Fond du Lac County embarked on its first foray into industrial development during the past 18 months when it developed the 73-acre Aeronautical Industrial Park located on the northwest edge of the Fond du Lac County Airport. The industrial park came together relatively quick after unexpected interest from Wausau Equipment Co. for an industrial site with access to the county-owned airport prompted local officials to purchase and develop a plot of farmland in the town of Fond du Lac, said Sam Tobias, director of planning and parks for Fond du Lac County.
Last year Wausau Equipment built a 22,000-sq. ft. research and development facility to test its airport snow removal products. A through-the-fence agreement with the airport allows the company to access runways at the airport.
“During the winter it’s great. We get free snow removal with Chicago-O’Hare-type of equipment,” Tobias said.
Wausau Equipment bought a six-acre parcel in the new development, but 11 lots still remain ranging in size from four to eight acres. Water, sewer and utility infrastructure is in place, and Tobias said the county will wrap up its work preparing the property later this year. This newest component of Fond du Lac’s industrial development toolbox offers an amenity the region couldn’t previously provide.
“We have a facility here for any kind of business that is involved in air freight service or needs quick, direct access to the airport,” Tobias said.
Oshkosh expanding spaces for the future
DRIVEN BY THE BOOMING INCREASE of Oshkosh Corp.’s defense business, new industrial construction has continued to grow at a steady rate in Oshkosh.
Currently the rugged vehicle manufacturer is erecting a 150,000-sq. ft. addition in the city’s Airport Industrial Park for an electrocoat painting facility. Riding on Oshkosh Corp.’s coat tails, vendors such as Whitefield Industrial Coatings and Jay Manufacturing have expanded their operations as well. Whitefield built a 70,000-sq. ft. addition to its facility adjacent to Oshkosh Corp.’s northside plant in 2008, and Jay Manufacturing recently completed a 10,000-sq. ft. addition to its second Oshkosh facility in the city’s Southwest Industrial Park.
The Southwest Industrial Park has proven wildly successful during the past decade. In 2005, the city expanded the industrial park with an additional 300 acres. In late 2008, the city purchased an additional 80 acres of farmland to the west of Clairville Road, setting the stage for future growth. In 2010, the city is planning more than $1.25 million in improvements to build streets and sewer and water infrastructure in the new Global Parkway section of the industrial park east of Clairville Road, said Oshkosh City Manager Mark Rohloff.
“We always try to stay about two years ahead of the curve,” Rohloff said.
During the past year, the Southwest Industrial Park gained an 87,000-sq. ft. distribution center for promotional products marketer 4imprint, and Avalon Papers built a 30,000-sq. ft. addition to its existing warehouse.
Heart of the Valley keeps beating
KAUKAUNA’S NORTH INDUSTRIAL PARK doesn’t have much space remaining for new construction, but the development has witnessed substantial expansion from existing firms during the past two years. Profile Finishing Systems completed a 21,000-sq. ft. addition of its existing manufacturing facility during 2009, and Tool Service Inc. more than doubled the size of its existing facility right down the road with an 11,000-sq. ft. expansion at the same time. Both projects were complete by mid-2009. During 2008, Weimer Bearing & Transmission added 21,000 square feet to its facility in the same industrial park, and Mid Valley Industries built a 24,000-sq. ft. addition to its industrial facility in 2008
Kaukauna’s newest industrial park – the more than 100-acre NEW Prosperity Center developed in 2007 – hasn’t witnessed any new construction in two years since Albany International and Liebovich Steel moved into the development. The remaining 11 parcels in the NEW Prosperity Center are as large as 15 acres, leaving plenty of room for growth and expansion.
When it comes to selecting a location for an industrial facility, Kaukauna boasts a critical advantage in offering the lowest electrical rates in the state due to its municipally-owned electrical utility. The low electric rates have been a key attraction for manufacturers who are heavy energy users, offering thousands of dollars in savings compared to energy costs from one of the major investor-owned utilities serving northeast Wisconsin.
Nearby Little Chute has also been the beneficiary of expansion from some of its longstanding employers during the past two years. Kraft Foods invested millions of dollars for a 108,000-sq. ft. addition to its frozen pizza production facility in early 2009. Kraft is currently in the final steps of negotiating to sell its entire pizza division to Nestle.
Victor Allen Coffee constructed a 30,000-sq. ft. addition to its warehouse and offices in Little Chute’s industrial park in 2008, and Van Zeeland Manufacturing built a 27,000-sq. ft. office and machine shop just down the road.
Although Kimberly has virtually no vacant commercially or industrially-zoned land left to develop, the city is experiencing more growth than it has in the past few years combined. That’s primarily due to the 58,000-sq. ft. corporate headquarters for U.S. Oil currently under construction on County Road CE. Earlier this year, Aurizon Ultrasonics completed its 15,000-sq. ft. addition and renovation of its manufacturing facility near Highway 441 and College Avenue in Kimberly.
Neenah and Fox Cities West
EVEN THOUGH SEGMENTS OF THE PAPER INDUSTRY have been in decline, the dangling remnants of the industry that built up Neenah 150 years ago are now paving the way to a rebirth of its lakefront on Little Lake Butte des Morts. The city bought and remediated the historic former Bergstrom Paper Mill near downtown, readying the site for private developers to spruce up the prime location with a mix of office/commercial, retail and upscale residential.
Plexus Corp. was the first to act on the site, and began constructing its four-story, 104,000-sq. ft. corporate headquarters early last year. The global designer and manufacturer of electronic circuit boards is poised to move into its new home this June.
There’s five additional sites on the property cleared and ready for development, said Neenah Mayor George Scherck, as well as public green space to complement the lake setting.
Neenah’s Southpark Industrial Center has become home to more than 75 businesses since being developed in 1983. It’s expanded four times since then and now includes more than 300 acres, including the newest expansion to the south of County Road G. That 60-acre expansion was outfitted with sewer and water, electrical and communications in 2008.
While no construction has occurred in the expanded portion of the industrial park, activity has still been abuzz. Late this past year, Innovative Machining built a 53,000-sq. ft. addition to its existing manufacturing facility, and Alta Resources built an 83,000-sq. ft. addition to its existing warehouse in 2008.
Out on its west side frontage road along U.S. Highway 41 in Neenah, Menasha Packaging built a 47,000-sq. ft. addition to its existing manufacturing facility in 2008, while adding 16,000 square feet to another of its production facilities further south in early 2009.
Scherck attributes Neenah’s development success to its access to the highway, its high quality of life, and its stable tax rate, which increased less than 1 percent for the city’s portion this past year. But he notes there’s also an intangible benefit to operating nearby other successful firms.
“Success breeds success,” Scherck said, referring to Bemis Company, Alta Resources and Plexus Corp. all positioning their headquarters within a few blocks of one another in downtown Neenah. “That tells people that if these companies selected Neenah and have worldwide reach, this may be the place for them to look at expanding.”
Elsewhere to the west of the Fox Cities, Technical Prospects built a 62,000-sq. ft. industrial facility during 2009 in the far southwest reaches of the town of Grand Chute near the Outagamie County Regional Airport. In the town of Menasha, Miron Construction Co. expanded its existing corporate headquarters in 2009 when it completed a two-story, 46,000-sq. ft. addition.
In Hortonville, Piping Systems Inc. constructed a complex of three industrial buildings totaling 45,000 square feet in late 2008, and Mid Valley Industrial Services Inc. built a 19,000-sq. ft. corporate office and shop in late 2009.
Appleton poised for more growth
AS APPLETON IS BEGINNING to run out of space in its Northeast Business Park, much of the development attention has turned to its SouthPoint Business Park, which was developed four years ago.
While the city didn’t sell any of its industrial or business park land during 2009, it did garner impressive victories in 2008. Time Warner built its three-story, 130,000-sq. ft. regional operations center in SouthPoint Business Park that year. At the same time just a few blocks away, Flair Flexible Packaging Corp. constructed a 15,000-sq. ft. warehouse and office and Appleton Hydraulic Components built a 12,000-sq. ft. industrial facility.
The remaining parcels include 100 shovel-ready acres, according to Karen Harkness, community development director for the City of Appleton, in lot sizes ranging from just over one acre to nearly 15 acres.
In late 2008, ThedaCare bought the remaining 53 acres of the Northeast Business Park for the campus of its Encircle Health medical facility, a three-story, 156,000-sq. ft. building which opened in October 2009.
Early in 2010, Foremost Farms USA embarked on a $67 million project to expand three plants at its existing production campus on West Spencer Street in Appleton. Harkness said city officials worked with the company to secure nearly $10 million in federal Recovery Zone Facility bonds from the state Department of Commerce.