By: Karen Brune Mathis
Toronto, Canada-based First Gulf expects to buy West Jacksonville property the first week of July to develop its first U.S. industrial park at an anticipated investment of more than $50 million.
“We are exporting our industrial development platform, and we’ve chosen Jacksonville to be our first market,” said Roman Brailovski, First Gulf vice president of strategic initiatives and operations and the lead on its U.S. expansion, on June 27.
“We believe in the big-picture dynamics of the Florida market and anticipate that it will continue to underpin the growing demand for industrial real estate,” he said.
Brailovski said Jacksonville stands out along the Southeast U.S. coast “because it has a compelling microeconomic narrative of population and labor market growth, transportation, and the commitment of local authorities to grow the port, as well as the positive reputation of the general business environment.”
First Gulf intends to buy about 53.87 acres and develop two buildings totaling 407,250 square feet on Parcel 4 in Westlake Industrial Park along Pritchard Road.
About 34 acres of the parcel can be developed.
The land purchase is about $5.6 million and the total project cost is estimated at more than $50 million.
First Gulf plans to develop two Class A industrial buildings that can be multi- or single tenant, based on demand.
The site plan design shows Building 1 at 299,520 square feet and Building 2 at 107,730 square feet.
First Gulf hopes to start construction by the first quarter of 2024 for completion in the third quarter of 2024.
It has not named the industrial project but said it will be respectful of the Westlake name.
Brailovski said that based on metrics he has seen, the supply of industrial space coming onto the Northeast Florida market in 2024-25 will struggle to meet demand and the vacancy rate will remain low.
It now is 3.8% to 4.3%, according to market reports, and higher than its recent record lows as developers continue to build industrial and warehouse space in Northeast Florida.
“We are an experienced developer and are proposing best-in-class industrial product at Westlake which will help mitigate any concerns about market headwinds. The influx of supply is a natural response to market demand and strength in the last three to five years,” he said.
Also, Brailovski believes that providing additional industrial Class A supply in the size range of 100,000 to 300,000 square feet is particularly relevant since “it is a desirable and underserved market segment.”
“When combining the size and quality of the buildings with their location, I think this is going to work out very well for everybody,” he said.
Brailovski expects logistics and warehousing tenants, given the site’s proximity to Interstate 295, I-95 and I-10, as well as its prominence on Pritchard Road.
However, he doesn’t rule out other uses.
“It is the intersection of Main and Main for the Class A industrial market,” he said.
Jacksonville presents the fundamentals “that are important for any asset class, but particularly industrial,” Brailovski said.
“The market is enjoying robust year-over-year rental rate growth, near-historically low vacancy and a steady influx of demand,” he said.
He said First Gulf plans to grow its platform in Jacksonville and explore other opportunities in Central Florida and in the Southeast.
The deal and the team
First Gulf will buy the Westlake Industrial Park land from Martel Holdings LLC, led by Bill Martel, head of Hanover Cold Storage.
Martel Holdings LLC, based in Elizabethtown, Pennsylvania, bought the land June 30, 2022, from Atlanta-based Norfolk Southern Corp., through Westlake Land Management Inc., for $3.24 million.
DKC Lending FL LLC of St. Petersburg issued a $3.5 million mortgage the same day.
Brailovski said Colliers Executive Vice President Guy Preston worked with First Gulf to understand the market.
“We have been in the market for the past year and a half and wanted to ensure that we secure a high-quality site. The market is moving very fast. Thankfully it is moving in the right direction,” Brailovski said.
He said Preston and Colliers associate Seda Preston will represent First Gulf as its leasing team on the project.
Brailovski said Guy Preston is also representing First Gulf in the purchase. Newmark Phoenix Realty Group Senior Vice President and Principal Bryan Bartlett is representing Martel Holdings.
“When this opportunity became available on Pritchard, Guy did an excellent job of helping us negotiate a deal that worked for both parties,” Brailovski said.
To make the deal work, Brailovski said First Gulf assembled a Jacksonville-based team that provided civil engineering, environmental due diligence, legal and design support. A site plan filed with the rezoning application shows Jacksonville-based England, Thims & Miller Inc. is the civil engineer.
“Together with our local consulting team and head-office support, we were able to complete our due diligence on the site rapidly and thoroughly,” he said.
Martel Holdings rezoned the vacant site to permit outside storage in connection with the proposed development.
About First Gulf and Great Gulf Group
With more than $5 billion in developed assets, First Gulf is the commercial division of the Great Gulf Group.
First Gulf has constructed more than 5 million square feet of commercial buildings, with another 2 million square feet of space under construction.
Within the industrial sector, First Gulf has built more than 6 million square feet of space with an additional 6 million square feet in the pipeline.
First Gulf also manages more than 5 million square feet of fully operational buildings.
Great Gulf Group develops, constructs and manages residential, resort, recreational, commercial and industrial real estate across 20 markets in North America.
Brailovski said that established in 1975, the Great Gulf Group of companies includes Great Gulf Homes, an international low-rise and landmark high-rise residential developer; Atlanta-based Ashton Woods Homes, one of the largest private residential builders in the U.S.; First Gulf, a market leader in sustainable, accessible and transit-oriented commercial developments and large scale industrial facilities; Tucker HiRise, a leading construction management company; H+ME Technology, a precision engineering pre-fabrication manufacturing facility; a Recreation and Resort division responsible for Taboo and Lora Bay in Ontario, and Killington Mountain in Vermont; and Granden Living, a build-to-rent division with a growing presence across the U.S. Sunbelt States.