A huge deal is lurking on the horizon of the local industrial real estate market, but expectations are low that it will be finalized before the end of the year.
Case New Holland, a tractor manufacturer based in Lake Forest, IL, has been poised for several months to sign off on a 1.1-million-sq.-ft. distribution and packaging center in Lebanon, but has yet to pull the trigger.
"They’re still waiting for management approval on whether Indianapolis is the right place for them to be with this project," said Tom Cooler, a broker with the local office of Los Angeles-based CB Richard Ellis, who helped CNH look for sites.
Indianapolis-based developer Duke Realty Corp. has been tapped to construct the facilities at its Lebanon Business Park near Interstate 65 and State Road 32, sources said. Some 345 acres are still available for development at the complex. Duke officials could not be reached for comment.
In a year when large industrial users were hard to come by, CNH would have been a huge coup for the market. The company’s indecision, which observers attribute to skittishness about the economy, is symptomatic of a broader hesitancy afflicting corporations.
"Corporate America is struggling with these decisions universally because of the economy," said Todd Vanatta, a commercial real estate broker with the local office of St. Louis-based Colliers Turley Martin Tucker. "Case New Holland’s profitability, or lack thereof, is playing a role."
Parent company CNH Global N.V., one of the world’s largest manufacturers of agricultural tractors and combines and the third-largest maker of construction equipment, lost $59 million in the first nine months of the year, compared with a $93-million loss in the first three quarters of 2001. The company was created in November 1999 through the merger of Racine, WI, based Case Corp. and Amsterdam-based New Holland N.V.
According to Cooler, CNH would build a total of 1.1 million sq. ft. in two buildings, with the larger one covering about 850,000 sq. ft. An additional 500,000 sq. ft. of outside storage would be included in the deal.
CNH spokesman Jeffrey Walsh confirmed the company has looked at sites in the Indianapolis area but would not comment on the specifics of the pending deal or a deadline for making a decision.
Industrial landlords are optimistic that corporate space users will be quicker to make firm commitments in 2003. "I think that in 2003, we’ll see companies revise their budgets to include capital for new facilities," said Tom Theobald, director of industrial development and leasing of Browning Investments Inc., a local real estate firm. "In 2002, they just wiped them off their budget sheets."
Theobald still thinks CNH will move ahead with the Lebanon facility. "They spent a lot of time and energy on the project. I don’t think they would abandon it once they got so close to the finish line," he said.
Industrial deals done in 2002 were fewer and smaller compared with 2000 and 2001, when several 800,000-sq.-ft.-plus leases were signed for warehouses and distribution centers. At 1.1-million sq. ft., CNH’s deal would be among the largest ever transacted in the Indianapolis market.
