AURORA, Colo. – With dramatic growth of e-commerce turning today’s warehouses into the retail stores of the future, industrial developers like Majestic Realty Co. are moving quickly and strategically to expand and adapt to the needs of retailers across the country.
While double-digit sales growth of e-commerce has fueled distribution projects in major regional hubs including Dallas/Ft. Worth, the Inland Empire, Chicago and Atlanta, Majestic Realty is preparing for similar e-commerce center demand in the Denver/Aurora market with the acquisition of 530 acres of land directly adjacent to its existing Majestic Commercenter business park. Located at the northeast quadrant of Interstate 70 and Tower Road, the expanded Majestic Commercenter site extends from the eastern edge of the current park and is bordered by E-470 on the east, 26th Avenue on the south and 38th Avenue on the north.
The land acquisition, which closed today, expands the Majestic Commercenter footprint to beyond 1500 total acres and positions the company to deliver product to a wide range of users from the smaller retailer to the literal Amazon’s of the e-commerce world, according to Majestic Executive Vice President and Development Director, Randy Hertel. The expanded “e-Commercenter” development is designed to accommodate up to 7 million square feet at build out with four, 1 million +/- square-foot buildings.
With online sales anticipated to reach $370 billion by 2017, up from $231 billion in 2013, the industrial real estate market and its developers will be a key player in the fast-growing e-commerce world as increased sales translate into greater demand for logistics facilities tailored to the needs of e-commerce.
“e-Commerce is driving the commercial real estate industry in ways we’ve not seen before,” said Hertel. “We’re seeing greater demand in the 1 million and up square foot range with land requirements and tenant improvements slightly different than the traditional warehouse and distribution building. With this additional flexibility in our overall park structure, we’re well positioned to accommodate the increasing activity and wide range of user needs, from build-to-suit to land sales and speculative development.”
Cushman & Wakefield Director Kirk Vanino and Senior Associate Taylor Hazard represented the private, family seller in the transaction, and the duo will work with Majestic to market the new site.
“Our primary industrial corridor hasn’t seen a new industrial land development like this in 20 years,” said Vanino. “Ironically, that 1995 land purchase was also by Majestic when it bought land known today as the Majestic Commercenter. This adjacent land site, also part of Majestic Commercenter, is really the bookend of our industrial along I-70. What will set this development apart is the ability to attract traditional industrial occupiers, as well as now having room for massive distribution centers and/or e-commerce facilities needing 1 million square foot facilities with ample parking.
“We’re thrilled to have the powerhouse partnership of Majestic Realty and Cushman & Wakefield working together on this super park,” Vanino continued. “In addition to our local and regional marketing, we will also reach out to corporate real estate leaders on a global basis as we strategize companies’ logistics and supply chain needs. Together, we will take our Denver industrial market to the next level.”
While e-commerce facilities are still relatively new in terms of industrial park development, Majestic is not new to the specialized developments having already delivered five, 1-million-square-foot and larger e-commerce facilities for major retailers including Walmart in the past 24 months. Other major players such as Amazon, Home Depot, Target and Kohl’s are driving the industrial sector to new heights as well.
“Companies are circling the metro market to find solutions for their e-commerce needs,” said Taylor Hazard. “It’s a question of when, not if.”
Purchased from a third-generation homestead farming family, the e-Commercenter focused expansion to Majestic Commercenter gives the company additional flexibility with infrastructure to be designed by its own construction development team and the specialized use and needs of tenants in mind.
Originally purchased by Majestic Realty Co. in 1995, the Majestic Commercenter has 14 buildings totaling 3.5 million square feet completed over the past two decades, including the speculative construction of a 500,000-square-foot building completed in 2014 and a 450,000 square foot warehouse scheduled for completion later this month.
With a very low single-digit vacancy rate in the park, Hertel has witnessed firsthand the growth of the deals as measured by building size over the past two decades.
“When we first started developing the Commercenter we were building 200,000-square-foot-buildings that were divisible down to four units if necessary,” said Hertel. “Today, the typical building we are developing is more like 500,000 square feet, but now it is only divisible to 100,000 – 150,000 square feet – two to three times larger than what we were building in the late 90s.”
The e-commerce impact on the industrial sector is clearly supporting the need to build bigger, more specialized buildings and to secure the best sites that are close to population centers, according to Cushman & Wakefield research.
In response to this powerful demand driver, there are a significant number of new development projects catering to e-fulfillment — for both e-commerce-only retailers like Amazon and multi-channel retailers such as Walmart and Target and others that are seeking to expand their e-commerce capabilities. Virtually all of the demand in this sector is for build-to-suit or owner-built facilities due to the highly specialized fulfillment and distribution requirements of e-commerce and omni-channel retailing.
With the expansion of Majestic Commercenter and a focus on e-commerce, Hertel and his Majestic partners are positioning themselves to meet the changing behaviors and growing needs of consumers and retailers alike.