The long wait for serious development to begin at a Hazelwood industrial park appears to be over.
After acquiring the roughly 150-acre site from companies affiliated with developer Paul McKee, a developer from the Kansas City area is moving forward with plans for two more warehouses in the Hazelwood Logistics Center.
A year ago, NorthPoint Development announced plans for an initial 200,000-square-foot warehouse in the industrial park near Missouri Bottom Road and North Lindbergh Boulevard. Now it is almost finished with a second, 400,000-square-foot warehouse and is moving ahead with plans for the third and fourth structures.
“Since they’ve come in, they’ve really come on strong,” said David Cox, who heads economic development for the city of Hazelwood.
The activity comes amid a hot local market for warehouse and logistics space. With the continuing growth of e-commerce and solid demand from U.S. consumers, space to store and ship goods in the heartland appears to be at a premium, and the St. Louis region’s low costs, proximity to rails and roads and a willingness to offer developers tax incentives appear to be encouraging a boom in speculative distribution space.
It couldn’t have come any sooner for the Hazelwood Logistics Center. Only one warehouse was constructed in the development, back in 2007.
Until last summer, McKee’s disputes with creditors and a legal fight with area cleanup king Environmental Operations Inc., not to mention the recession, stymied further development at the site. In 2009, McKee handed over the initial warehouse to a bank that threatened foreclosure.
In 2015, NorthPoint paid $9.2 million to acquire the park from McKee’s companies, which were again facing foreclosure. That allowed the local developer to settle the legal tussles surrounding the Hazelwood project and focus on his NorthSide Regeneration project, which scored big this year when the National Geospatial-Intelligence Agency opted to build its new $1.75 billion western headquarters in the middle of its north St. Louis footprint.
Since then, NorthPoint has moved to take advantage of strong demand for new warehousing space in the region.
Available space dropped 1.1 percent in the third quarter compared to the second quarter here, which commercial real estate firm CBRE said was the largest percentage decline among the large markets it tracks, according to a report last month.
Cox said NorthPoint’s first warehouse, completed earlier this year, houses automotive supplier Perfection Clutch, which moved from another Hazelwood building, and GTS Distribution, which delivers board games.
The second warehouse doesn’t have a tenant identified yet, but it is nearly complete. Several warehouses in the region are being built on spec, or without tenants identified during construction.
The third warehouse will be 348,480 square feet and the fourth warehouse is planned to be 218,800 square feet, Cox said. Those, too, are likely to go up on spec, and there is room for three more buildings, Cox said.
The city last week approved a sales tax exemption on construction materials for the planned warehouses. Last year, it also approved tax abatement for the entire park at 100 percent for a decade and 50 percent for the next seven years, Cox said.
Because NorthPoint preferred tax abatement, the tax increment financing district that had covered the site was shrunk down to only apply to the first warehouse that McKee had built, Cox said.
The clock started ticking on those incentives when they passed, he added.
“It’s in their best interest to get those buildings up as quickly as possible,” Cox said.
For NorthPoint, it’s the suburban Kansas City developer’s latest foothold in the St. Louis market.
In addition to the Hazelwood Logistics Center, last year NorthPoint purchased a 240,000-square-foot Hazelwood warehouse on Pershall Road and a 435,200-square-foot warehouse in Earth City. The Earth City building, which housed the operations of the old Forest Pharmaceuticals until 2014, won a new tenant after shoemaker New Balance leased a big chunk of the building earlier this year for its e-commerce operations.
Two assisted living centers in the region are owned by NorthPoint.
Also announced in 2015 is NorthPoint’s biggest project locally: a mammoth 73-acre, 1.13-million-square-foot warehouse and subassembly facility near General Motors’ Wentzville assembly plant. That project, intended to supply GM’s plant, began earlier this year and is supposed to finish in 2017.