5 questions with the man behind a $175 million deal
In October, executives with Indianapolis-based Browning Investments joined Bullitt County officials to break ground on the first building in its $175 million Bullitt County industrial business park that will exceed 4 million square feet. The development is known as Velocity65 Trade Center and will be built over several years across 300 acres.
The first facility, known as Velocity 1, includes about 721,000 square feet of bulk warehouse space on more than 40 acres along Buffalo Run Road, a $30 million project.
Dale Pfeifer, director of real estate development for the 40-year-old company, said during a recent interview that Browning spent the fall on site completing some infrastructure construction, including work on the first building with accompanying road pads and site utilities. He expects Velocity 1 to be completed (and hopefully filled) by July.
As far as the company’s building strategy in Bullitt County, Pfeifer said Browning will construct speculative inventory buildings based purely on market demand, meaning they could start on another building once a lease is signed.
“We can also construct buildings to-suit for specific customers at any point, so we could have multiple buildings under construction at the same time,” he said.
Browning has constructed and financed more than 22 million square feet of commercial real estate in Indiana, ranging from downtown high-rises to more than 1,500 acres of industrial land next to Indianapolis International Airport and existing FedEx facilities.
“Our approach to each project is in a collaborative partnership way and by doing what we say we’re going to do,” Pfeifer said. “We thrive on ‘connecting the dots’ in complicated, long-term projects.”
He expects technology and health care-related companies to be attracted to Velocity65, but said the park should also attract e-commerce and logistics companies because of its proximity to United Parcel Service Inc.’ Worldport in Louisville.
Pfeifer said Browning is in an interesting position, where it can provide ample parking across its 300 acres that will make it attractive to businesses, though he acknowledged Browning will be in direct competition with the 6,000-acre River Ridge Commerce Center in Southern Indiana. River Ridge courts the same type of clientele and attracts large building construction of industrial developments.
Pfeifer said he likes River Ridge and would not rule out the possibility of Browning buying property and developing facilities there, “It has a lot of really good things there, and the infrastructure is there in a major way,” he said. “We considered a strategy of building in both places, and we haven’t ruled that out yet.”
Bullitt County is the first region Browning has expanded into outside of Central Indiana, but Pfeifer said the company is here for the long haul. He took some time to answer five questions below.
What do you feel is the Louisville region’s greatest business asset and why?
I find that Louisville excels at many things, making it a great place to live, work and play, as well as a fun place to visit. Great destination opportunities (bourbon, Churchill Downs, IronMan, festivals etc.). I can also name two new restaurants in Indianapolis in 2016 that are based in Louisville.
I feel the Louisville region’s greatest asset is its logistics infrastructure, highlighted by the presence of UPS Worldport. Only Memphis, Tenn., and Indianapolis have something similar with FedEx. UPS Worldport is a game-changer for driving e-commerce fulfillment nearby.
How long did you scout Bullitt County and what factors made you choose to invest there?
We’ve been scouting Bullitt County with Phil Charmoli (Cushman & Wakefield/Commercial Kentucky industrial broker) since 2007. Prior to the financial crisis in fall 2008, we worked on another site assembly in Shepherdsville, which thankfully didn’t work out because we found a better, beachfront property with Velocity65.
As for why we were interested, there were three main factors: Access to UPS Worldport — only readily available big-box site within 15 miles of UPS; access and visibility to Interstate 65 — a hugely important truck route linking Northern markets such as Chicago and Indianapolis with Southern markets such as Nashville, Tenn., and Atlanta; and ability to assemble a large-scale site (300 acres) suitable for e-commerce facilities and at the front door to an established, proven location of over 9 million square feet of modern distribution facilities.
What impact do you think the completed Ohio River Bridges Project will have on the Louisville region and do you expect to invest money in Louisville or Southern Indiana in the future?
(The) bridges will definitely have a positive impact on easing the flow of traffic. I know there’s smarter people out there — economists — that have studied and figured out there will be a big economic impact as a result.
My take is Southern Indiana will initially see the biggest impact, particularly at River Ridge with the opening of the new Lewis and Clark Bridge, which will tap into east Louisville’s labor and consumer pool and should lead to more uses in addition to industrial.
(And) we do expect to invest in both Louisville and Southern Indiana in the future -— we do see the value improved with better connection of Louisville with Southern Indiana.
We believe in and see value in Southern Indiana. However, from an industrial logistical standpoint, we’d rather be on the Louisville side as it is closer to UPS and (we) avoid toll charges
Nationally, where do you see the Bullitt County/Louisville area as it comes to industrial activity and why do you think the area, along with Southern Indiana, is so hot?
E-commerce is driving the industrial real estate market. That’s true nationally for sure, but in Louisville it’s magnified due to UPS and Louisville’s central location within one-day delivery to 65 percent of the U.S. population.
It’s not just Amazon. Every retailer has analyzed their e-commerce business, but only 50 percent have implemented an e-commerce strategy.
With developers like us having entered the market with an available supply of big boxes, Louisville is now on the national site selector’s list. In the past, companies weren’t coming because the buildings weren’t available.
Developers are able to build in Louisville because institutional real estate investors now view owning industrial real estate in Louisville as a safe bet.
What’s one thing you’d like our readers to know about Browning and its investment strategy?
That Browning has entered the Louisville market for the long-haul. We believe in Louisville. We are committed to a world-class development at Velocity65, yet see opportunities to develop other innovative and transformative real estate in the greater Louisville region.
For more information
Finley, Marty. “5 questions with the man behind a $175 million deal” Louisville Business First, 19 Jan. 2017. http://www.bizjournals.com/louisville/news/2017/01/19/5-questions-with-the-man-behind-a-175-million-deal.html