Chicago developer sells off Lakeland warehouse for $41.2 million — and kicks off the biggest bet ever on Central Florida's industrial market
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Aug 4, 2020

A Chicago developer has sold off a Lakeland warehouse for $41.2 million and broken ground on its next big bet on Central Florida's industrial market: a million-square-foot speculative building.

Brennan Investment Group, who partnered with Grandview Partners on the project, sold CenterState West to Nuveen Real Estate, a division of TIAA. The 440,000-square-foot warehouse is leased to PepsiCo. A team of brokers from Cushman & Wakefield Inc. represented Brennan and Grandview in the sale.

Rick Brugge, executive managing director with Cushman (NYSE: CWK), said in a statement that the Interstate 4 corridor is "one of the fastest growing warehouse and distribution hubs in the state of Florida due to its logistical advantages.”

Now, Brennan is breaking ground on what's believed to be the largest speculative industrial development underway in Central Florida: The 1 million-square-foot 400 Building at CenterState Logistics Park East. It's breaking ground without a tenant in place, although Brennan managing partner Bob Krueger told the Tampa Bay Business Journal in late 2019 that the developer was already fielding inquiries for the space and that it would likely be leased to one tenant.

CenterState Logistics Park East is 164 acres, which Brennan bought in late 2019.

The developer is no stranger to record-setting deals in Central Florida: Prior to this building, the 605,000-square-foot building in CenterState Logistics Park West was the area's largest ever speculative building. It was leased to Quaker Sales and Distribution, a division of PepsiCo. (NASDAQ: PEP), and is used to distribute Gatorade. It sold for a top-of-market $59.6 million in 2018.

The dynamic underway in I-4 industrial real estate is "extraordinary," said Mike Davis, vice chairman at Cushman.

"It's been happening around the country," Davis said of speculative, million-square-foot warehouses. "We’ve never really seen it here. But the demand for large space has really accelerated in a dramatic way."

At just over 1 million square feet, the new warehouse is expected to be the largest speculative project under construction in Central Florida.

Brennan's speculative warehouse may be even better timed than the developer originally anticipated: Central Florida's industrial market has been booming for years, but demand for space is reaching unprecedented levels in the wake of the novel coronavirus pandemic. No longer keen to linger in stores, shoppers are shifting more spending than ever before to online platforms.

“In Central Florida, big-box warehouse and distribution tenants represent a range of industries. E-commerce continues to drive a significant portion of demand for industrial space in this market, and we see no slowdown in the coming years,” Krueger said in a statement. “As the market continues to attract larger users of industrial space, we will be ready to accommodate the need.”

A team of brokers from Colliers International (NASDAQ: CIGI), based in the firm's Tampa Bay and Central Florida offices, will market the warehouse for lease.

Ashley Cheek, vice president of the Lakeland Economic Development Council, said Tuesday that the majority of warehouse users seeking space in the Lakeland area want at least 500,000 square feet.

"It seems that that’s the popular size right now," she said. "That need has not gone away."

Warehouse demand, Cheek said, remains the same as it did pre-Covid, but the LEDC has seen an uptick in e-commerce users searching for real estate.

“The I-4 industrial market from Tampa to Orlando has now fully evolved to a full-blown distribution corridor,” Edward Miller, executive managing director for Colliers International Tampa Bay, said in a statement.