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Berry Plastics
Oct 4th, 2010Business First of Louisville -May 18, 2009
Friday, May 15, 2009
Berry Plastics to be first tenant at Jennings Crossing
Business First of Louisville - by John R. Karman III Staff Writer
The impact of the recession on the local industrial real estate market has been profound, with demand for bulk properties — those in excess of 100,000 square feet — practically disappearing.
But developer Bob Duane, president of Duane Realty Inc., has managed to buck that trend, signing an agreement with Evansville, Indiana based Berry Plastics Corp. to be the first tenant in his Jennings Crossing complex in central Jefferson County.
Berry’s Louisville subsidiary, Captive Plastics Inc., will lease 102,000 square feet in the first of four buildings proposed for the $25 million complex, which is planned along Jennings Lane between Produce Road and East Indian Trail.
The facility will be a distribution center for the company, according to Duane. Captive Plastics currently operates a manufacturing plant at 11601 Electron Drive in Bluegrass Research and Industrial Park.
That plant, which makes plastic bottles, caps and food packing closures, will continue to operate, Duane said.
Officials with Berry Plastics in Evansville referred questions about the company’s local expansion to representatives at its Louisville facility.
Company representatives there could not be reached for comment before Business First’s press deadline.
Expansion project planned for Evansville
The Captive Plastics distribution center is expected to be operational on June 1, according to Duane. He said he was unsure of its exact employment but estimated that it could approach 50.
The plastics company’s manufacturing facility in Bluegrass industrial park employed 103 people in 2008, according to figures from the Kentucky Cabinet for Economic Development.
It was unclear whether any of those workers would be transferred to the new distribution center.
Growth has been a familiar theme for Berry Plastics this year.
In March, the company announced plans to invest $150 million over seven years to expand its thermoform operations at its corporate campus in Evansville. The expansion is expected to create more than 360 production-related jobs.
The company currently has 66 manufacturing facilities around the world and nearly 13,500 employees, according to information on its Web site, www. berryplastics.com.
Slumping market expected to improve
Duane said he had been working on an agreement with Berry Plastics since October and called it “phenomenal” to get a deal done, considering the state of the economy.
The Cincinnati office of the Chicago-based real estate services firm Jones Lang LaSalle represented the Evansville company in the lease arrangements.
Interest in bulk industrial spaces has “quieted down a whole lot since the end of the first quarter,” Duane said. “We feel very fortunate.”
Greater Louisville’s previously hot industrial real estate sector began cooling down as the economy turned in 2008.
Business First reported in its May 8 issue that the top 10 firms on its annual industrial brokers’ list reported only $281 million in total deals last year, compared with $504.2 million in deals in 2007.
Broker Doug Butcher of CB Richard Ellis/Louisville blamed an absence of leasing in the bulk market for part of the problem.
He did predict that the market eventually will improve — possibly as soon as the third or fourth quarters of this year.
Financing for the expansion of the first building is being provided by Birmingham, Ala.-based Regions Financial Corp., Duane said. It is slated for completion by the end of the year.
Project build out could take five years
Future buildings at Jennings Crossing are planned to be 173,250 square feet, 53,200 square feet and 25,000 square feet.
Duane said he doesn’t expect to begin work on any of them before 2011, when he hopes the market will have fully healed and that space vacated during the recession will be absorbed.
By that time, he said, lenders should be more open to the idea of financing speculative developments. Financing still is needed to finish Jennings Crossing.
Duane plans to complete the complex over the next five years.
One of the biggest selling points of the project, he said, is the fact that the development will be one of few east of Louisville International Airport to offer new space in blocks of 50,000 square feet, 100,000 square feet and above.
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