JLL Identifies Need for Industrial Space, Partners to Develop Trophy Distribution Center
JLL leases Northeast Ohio’s largest speculative industrial property, Victory Commerce Center
Spotting the Need
Victory Commerce Center (VCC), Northeast Ohio’s largest speculative project, is a Class A asset in Glenwillow, Ohio that came to fruition under unique regional circumstances.
Last year, Cleveland reached its highest point of industrial construction in 21 years, thanks in large part to the city’s ability to execute last-mile initiatives such as next- and same-day shipping. While there has consistently been a high demand for quality industrial space, companies are historically hesitant to invest in land and build their own space–rather, they want it built for them. And, when it comes to the setup of these buildings, location is key. In the long run, occupiers are much more likely to compromise on square footage for a prime, accessible location.
After nearly 15 years of experience working with industrial tenants in the Cleveland area, JLL Vice President David Stecker identified the glaring need for more industrial offerings. Considering the region’s tight vacancy and lack of inventory, Stecker and his team used this insight to pitch a trophy modern bulk warehouse to meet tenant needs and attract occupiers to the market.
Our team was confident that the current market fundamentals and rise of e-commerce would further accelerate the demand for warehouse distribution space in the region.
Selecting the space
Several factors played into selecting the land for Northeast Ohio’s largest speculative project:
- Acreage: VCC is situated on 40 acres, enabling a large-footprint design to be configured for the build-to-suit.
- Industrial park: To attract the right tenant, the development team searched for a mature industrial park with distinguished suppliers who also valued accessibility. The selected park, Diamond Business Park, is home to well-established companies including HD Supply, Superior Beverage and TTI Floor Care.
- Infrastructure: VCC is located just minutes from nearby highways, including Interstate-77, I-71, US Route 422 and the Ohio Turnpike.
- Location: Glenwillow, Ohio is an ideal location for a distribution setup. Nearby, Cleveland and Akron are less than 30 miles away and major metropolitans such as Chicago, Detroit, Indianapolis and Washington D.C. are within 300 miles.
- Efficiency: Build-to-suits and large speculative projects offer both tenants and investors a more efficient solution instead of operating ineffectively across multiple smaller, outdated buildings.
Once the space was selected, construction on VCC broke ground in summer 2018 and was completed just over a year later in fall of 2019. During that time, the JLL brokerage team was busy searching for VCC’s first tenant.
Securing the tenant
While VCC was still under speculative construction, the leasing team considered both single- and multi-tenancy options. However, as excitement around the project grew, the team focused on full-building users seeking to occupy the entirety of the space.
Ultimately, due to the great amount of interest in the property, the leasing team started to focus more attention on evaluating the tenants and how they would impact building value vs. searching for additional end users. Before delivery, the landlord had multiple groups interested, which gave them the opportunity to be selective and aggressive with terms. From there, JLL was able to help the landlord complete a lease with a global Fortune 100 company that fully occupied the 434,000-square-foot warehouse on a long-term basis.
Now that the building is fully occupied, the JLL team is selling the building and has garnered much demand. Because of this, the landlord is set to make a successful return on investment that far exceeds their underwriting.
Thanks to the team’s deep market knowledge and comprehensive network, JLL was able to capitalize on Northeast Ohio’s need for more bulk warehouse square footage and deliver a fully occupied distribution center that will bolster investment interest for years to come.