| Like many industrial companies, IDI has had to scale back its pipeline in light of the recession. |
By Stephen Ursery
When National Real Estate Investor compiled its annual survey of the largest industrial developers this year, Atlanta-based IDI assumed its familiar spot near the top of the listing, placing in the No. 2 spot. But, like so many other players in the industrial marketplace, IDI has felt the effects of the economic recession and has scaled back its development load in response.
The company projects it will start or complete 9 million sq. ft. of industrial space in 2002, a 38% drop from the 14.5 million sq. ft. recorded for 2001.
IDI simply is part of a nationwide trend. After soaring for much of the late 1990s and 2000, construction levels have come crashing back to earth in light of the recession. In fourth-quarter 2000, 121.8 million sq. ft. of industrial space was under construction, according to New York-based Grubb & Ellis Co. By the first quarter of this year, the total had plunged 53%, to 56.9 million sq. ft.
Despite the construction slowdown, Greg Gregory, president and CEO of IDI, claims this is no time to panic. "There would be more concern if capital was expensive, but it's not," he says. "Secondly, we don't see restrictive credit. If you've got a good project, if you've got leasing, if the market is there, you can borrow the money. For those two reasons, it's much less painful going through this cycle than some other downturns. Still, you've got to be very, very careful."
Even in the midst of the recession, IDI has some major projects under way. The company recently completed an 832,000 sq. ft. distribution facility for Toys "R" Us in Midlothian, Texas, just south of Dallas. The building features 60 ft. clear ceiling heights, an unusually tall industrial structure. "We would never build a building like that on a speculative basis, for example," Gregory says.
In August, the company is slated to complete a 780,616 sq. ft. headquarters and distribution facility in Addison, Ill., for The Pampered Chef, a maker of kitchen tools. Located on a 42-acre plot of land, the building will feature approximately 180,000 sq. ft. of office space and 1,100 parking slots. Also, in Pompano Beach, Fla., PublixDirect, a new home grocery-delivery venture of the Publix grocery store chain, has leased a 139,000 sq. ft. distribution center developed by IDI.
Gregory says that come this fall, industrial developers should be able to ascertain how strong of an economic recovery is taking place. "That's because July and August are always slow in terms of leasing -- period," he says. "But starting in September and going through the end of this year, we'll really get a sense of what kind of rebound we're dealing with by seeing what the pace of leasing is."