Work begins on new speculative warehouse in Rogers

Scannell Properties began work this week on the site of a 220,000-square-foot warehouse it is building in Rogers, the latest in a barrage of speculative industrial construction around the Twin Cities.

The building, named Kinghorn Logistics Hub, will sit on a 67-acre plot next to two of Scannell's recent projects: the 350,000-square-foot FedEx Ground distribution center, currently under construction, and the new headquarters for Clam Corp., maker of ice fishing accessories, which was completed a year ago.

Speculative industrial projects have recently gravitated toward the northwest corner of the metro area, where swaths of land are still available for development.

"Most users that want to be in the northwest metro want to be in Brooklyn Park or Maple Grove, but there's not a lot of space left in Maple Grove, and Brooklyn Park doesn't want a lot of distribution centers," said Tim Elam, Scannell's Twin Cities manager.

Elam is confident the space, slated to be complete by June, will lease up in six to 12 months despite being farther out from Minneapolis and St. Paul.

"We like our location, and we like our proximity to FedEx," he said, noting a development windfall often follows a new FedEx facility, which is scheduled to open next fall.

Already there are interested tenants, said Chris Hickok of Jones Lang LaSalle, who is marketing and leasing the space.

Scannell has purchased 148 acres between I-94 and Brockton Lane over the past six months. Apart from the buildings, the developer is pouring $2 million to $3 million into road infrastructure for the area. Indianapolis-based Scannell, with permission from the city of Rogers, is widening the access road connecting to Cabela's and adding dedicated turn lanes and stoplights in order to improve truck delivery speeds.

Scannell officially entered the Twin Cities market in 2012 when it opened its Minneapolis office. Since then, Elam has been trying to bulk up Scannell's Twin Cities portfolio by developing three to five new properties a year.

While Scannell is pursuing some office space endeavors, its work in Rogers is a part of a larger trend of industrial building this year. The metro area has 1.8 million square feet of industrial space currently under construction — a fourfold increase from a year ago — according to a Cassidy Turley report this fall. This is fueled by a multitenant industrial vacancy rate that dropped below 10 percent in 2014 for the first time in nearly a decade.

"There's not a lot of property right now, but there's a lot of property being built so we are going to have a lot of competition," Elam said.

The contractor is Kinghorn General Contractors of Rogers.