Warehouses for Sale, Above and Below Ground
An industrial developer is putting its entire 19 million-square-foot portfolio up for grabs, including two giant underground complexes.
Amid robust demand for warehouses, market pros say the offering could be worth more than $1 billion. Space Center of St. Paul, Minn., is seeking to sell the package intact. Eastdil Secured is running the marketing campaign.
The two largest concentrations are in the Los Angeles area — 15 buildings totaling 7 million sf — and near Kansas City, Mo., where two properties encompass 6.7 million sf of underground space in converted limestone mines. There are also buildings in the Chicago, Atlanta, Memphis, Minneapolis and Dallas markets.
The California portion of the portfolio consists largely of high-quality warehouses in the Inland Empire submarket that could be worth about $100/sf. Most have features favored by institutional investors, such as 30-foot ceilings and modern sprinkler and lighting systems.
The underground complexes are in Missouri, about 13 miles from downtown Kansas City. That market has at least 27 million sf of underground commercial space because in the 1950s, businesses began converting abandoned limestone mines that dotted the area for storage and other uses.
The listing includes the 4.9 million-sf Space Center Executive Park, at 1500 West Geospace Drive in Independence, and the 1.8-million-sf Summit Park, at 5351 NW Lee’s Summit Road in Lee’s Summit. Both have 15-foot ceilings that are supported by enormous pillars, and are about 80 feet below the surface. The limestone provides insulation that ensures stable temperatures.
Buyers may push back on the underground space being coupled with the traditional warehouses, and there could be pressure to break up the package.
Space Center was founded as Terminal Warehouse Co. in 1916 by Harry McNeely, a former railroad worker who went on to become a prominent St. Paul businessman before his death in 1968. In 1990, a family quarrel prompted his two sons to split the company, by then called Space Center. Harry McNeely Jr. named his company Meritex Enterprises, while his brother, Donald McNeely, kept the Space Center name.
Donald McNeely, who also was one of the original investors in the Minnesota Vikings, passed Space Center on to his family when he died in 2009. The firm also provides third-party logistics services and owns an oil-and-gas company.
Meritex, also based in St. Paul, owns 10 million sf of industrial real estate. Harry McNeely Jr. no longer leads that company, but remains on its governing board.