Three real estate veterans are betting they can turn 170 acres of Henderson desert into a thriving industrial hub.
Panattoni Development Co. partner Doug Roberts, former homebuilder Terry Manley and M.J. Dean Construction founder Mike Dean have teamed up to develop land between the M Resort and Henderson Executive Airport. They plan to construct 14 buildings totaling almost 2 million square feet, including a 300,000-square-foot FedEx distribution center.
The city of Henderson owns about 150 acres of the project site. The City Council is expected to vote Oct. 16 on whether to sell the land to the developers for $2.07 per square foot, or $13.6 million.
The money would go to the U.S. Bureau of Land Management, which transferred the land to the city in 2010 for free for economic development uses.
The project, known as South15 Airport Center, would be the first large-scale industrial development in the valley in years. Developers say it will employ roughly 2,900 people. But finding tenants could prove difficult. The valley already has plenty of low-priced industrial buildings for rent, including many in Henderson.
Henderson has 12.7 million square feet of total industrial space, nearly 13 percent of the valley’s total inventory. The city’s 9.7 percent industrial vacancy rate is better than the valley’s 12.3 percent rate, but its average asking rent of 42 cents a square foot is lower than the regional average of 47 cents, according to the brokerage firm CBRE Group.
The project site is ideal because of its proximity to Interstate 15, the freeway that connects Las Vegas to Southern California, Manley said. It’s also cheaper to buy land there as compared with buying land off the Las Vegas Beltway in southwest Las Vegas. Broadly speaking, southwest is a competitive submarket with the most industrial space in the valley and some of the highest asking rents in the region.
The 150 acres would be sold to South 15 Partners LLC, an entity managed by Dean and Manley. Through an affiliate, they own 10 acres of adjacent land and are in escrow for another 10, all of which are included in the project.
They expect to break ground in spring.
“We think the industrial market is returning,” Manley said.
The developers are offering “build-to-suit” facilities designed for tenants’ specific uses. They also would be willing to sell chunks of land so tenants can build their own facilities. In general, developers cannot get funding anymore for speculative construction, said Colliers International Senior Vice President Dan Doherty, a leasing agent for the site.
One likely tenant is FedEx.
The Memphis, Tenn.-based shipping giant has a 125,000-square-foot FedEx Ground facility near West Sunset and Eastgate roads in Henderson. When that lease expires, the company is expected to move operations to a 300,000-square-foot building at South15, Henderson real estate portfolio manager David Norris said.
FedEx Ground spokeswoman Erin Truxal said the company “continuously evaluates opportunities” to enhance customer service, but she declined further comment.
Previous efforts to develop the outer edges of southwest Henderson flopped during the recession. The South15 site is just south of “City Crossing,” a $2 billion, 126-acre project that never advanced beyond site work. City Crossing was supposed to have housing, offices, retail and hotels but went bankrupt in June 2008.
Its developer, Bill Plise, filed for personal bankruptcy this year. He listed $506 million in liabilities, including at least $194 million of personal guarantees for City Crossing project loans. (He listed only $4,738 of assets, including $250 worth of clothing and a 9mm Glock pistol, also valued at $250.)
Efforts to reach Plise for comment were unsuccessful.
Manley said City Crossing might have been a strong project, but like many other construction plans at the time, it couldn’t survive Las Vegas’ recession. As he sees it, it's a timing issue.
“We feel pretty good about it,” he said of South15.