Building for the Future

by | 19 January 2016

When Tim Elam, Managing Director of Development for Indianapolis-based Scannell Properties, is asked what commercial real estate fundamentals and more specific to the industrial product type will remain most important two or three decades hence, he is quick to respond– the delivery of relevant and functional buildings that may be easily modified to meet the evolving needs of a user is paramount. He knows the answer because it’s imbedded into each project Scannell completes, whether it’s for a state-of-the-art logistics center or a office building.

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“I hope to see our buildings as useful and relevant in 20 years as they were the day we completed them, unlike the obsolete warehouse and manufacturing facilities we see today in so many markets across the country,” Elam says.

Anticipating a customer’s evolving business operations and how it will use a space in the future has been a focus of Scannell Properties since its founding in 1990, when the well-capitalized and privately held turnkey development firm completed its first build-to-suit industrial project. Today the company is one of the nation’s leading developers of built-to-suit projects in North America, with some 250 completed projects totaling 30 million square feet in 44 states and three Canadian provinces.

To avoid the obsolescence Scannell witnesses in most major industrial markets, it builds into its projects enough flexibility to meet the anticipated changes  in technology and user demand, especially when it comes to logistics.

With its multidisciplinary, in-house team of experts, Scannell Properties has the capacity to assemble the resources and talent to design and complete projects of any size.  By “turnkey,” the company means it offers clients in-house expertise covering every phase of development.

“We remain flexible and adaptable to a client’s unique business needs through our core services,” says Elam, “with much of our business from repeat clients.” That may be an understatement. Scannell’s repeat business has held steady at an impressive 70% and those repeat clients include some of the most notable names in Corporate America: DuPont Pioneer, GE and FedEx—for whom Scannell is a leading developer in the United States.

Just as technology will to continue to advance allowing users of industrial space to work smarter and to manufacture and distribute product faster, Scannell has witnessed an increased interest among its clients in facilities designed with green building initiatives. Scannell expects this trend will continue as users realize savings on operating costs by implementing energy saving technologies such as LED lighting, Natural Light, etc.  An example is the 650,000 square foot warehouse/distribution facility Scannell developed for Kendall Jackson as the first Leadership in Energy and Environmental Design (LEED) Gold Certified climate-controlled warehouse in California,a project that took just 22 months from inception to completion.

Flexibility in current construction is key to Scannell’s strategy. That flexibility is comprised of building designs that allow for an increase in the number of loading doors and docks, increased electrical capacities to meet heavier future demand, more robust and flat concrete slabs to handle heavier floor  loading, and maintaining enough surrounding space to accommodate additional  building expansion, employee parking and trailer parking.

“Technology will be driving nearly every decision in terms of industrial building design, especially in the ever-evolving logistics sector where the talk of drone delivery is not far-fetched and in an environment where same-day or just-in-time delivery capabilities are critical for a user,” he notes. This is perhaps the most notable change Scannell has witnessed in the last decade among e-commerce moguls such as Amazon and mid-size retailers, suppliers and distributors alike.

Traditionally focused on build-to-suits primarily in the industrial market, Scannell has also completed several office build-to-suits and has recently placed a concerted focus on speculative development opportunities in markets where existing available product is limited or obsolete.

The company has become a leader in what Elam calls “second tier” industrial markets, where demand for mid-size building is strong and there is less competition, especially from the large, public traded institutional development firms.

Lately, it has begun to add a healthy number of office projects as well, both build-to-suit and spec. In fact, as the economy continues to show signs of strength, the number of spec projects overall for Scannell has grown, something that was unthinkable a few years ago.

“After making a push to become a bigger player in the Twin Cities development market a few years ago, we have enjoyed a great relationship and great successes with Tim Elam and Scannell Properties,” says Colliers’ Ryan Krzmarzick, a vice president and industrial specialist in the brokerage firm’s Minneapolis-St. Paul office. “They have quickly become a ‘go-to’ developer for industrial projects in our market and already have a great reputation.”

Colliers represented the firm on a speculative industrial project in Mendota Heights, a sub-market of the Twin Cities. The 72,000 square foot flex/ light industrial building was fully leased upon completion due, in large part, according to Krzmarzick, to Scannell’s flexibility and quick, in-house decision-making process on everything from tenant improvements to the signing of lease documents.

Colliers is now representing Scannell as listing broker on a new industrial park development in Lakeville, Minnesota, which may accommodate a variety of uses within a maximum buildable area of  2,250,000 square feet.

In 2014 Scannell delivered 7.3 million square feet of industrial and office space, according to Elam. The firm is expected to add 10 million square feet in 2015. Scannell’s growth in 2016 is expected to remain steady as long as the economy holds and the technology sector continues to make the expected advances in logistics. “They (logistics firms) will need our services and those of others in the development business like never before,” Elam predicts.

“Over the past 25 years, our success can be attributed to our experienced leadership, internal expertise, client-focused relationships and fiscal responsibility,” he notes. As a privately owned real estate development and investment company, Scannell is proud to have completed development projects in nearly all of the 50 U.S. states and in three Canadian provinces and looks forward to continued growth and development opportunities, both speculative and build-to-suit, in existing and new markets.

A voracious reader and a political junkie, Keith enjoys surfing and volunteering in his community when his nose isn’t buried in the news or a good book. He is also the proud father of a thrice-deployed infantry sergeant in the U.S. Marine Corps.

This article was first published in the Winter 2016 Knowledge Leader Magazine. Download a digital copy today.