Developer Courts Multiple Tenants for Kmart Distribution Center
YOUNGSTOWN, Ohio – A day after closing on the acquisition of the former Kmart distribution center in Bazetta Township, Christopher Semarjian said the property already has multiple interested parties from the industrial sector.
On Wednesday, Semarjian’s company, Industrial Commercial Properties LLC, Cleveland, closed on the 1.4-million-square-foot property at 541 Perkins Jones Road, Warren. Semarjian did not disclose the final purchase price or the specifics of the potential tenants, but said their need could range from 400,000 square feet up to one million.
“At least 400,000 square feet would be spoken for,” he said. “In our business, you never know until you get it concluded. It’s a big building that will most likely be not taken by one user.”
Industrial Commercial Properties plans to get the space ready for industrial tenants, he said. The property is in “very good condition,” with all of the equipment still in place, including conveyors, sorters, racking and materials handling equipment, he said. Most new tenants will likely need walls to divide space between them. Other upgrades may include new lighting and new docks, depending on tenant need, Semarjian said.
The building is one of the largest distribution centers available in the region, he said, noting that it’s much larger than the average market size that’s in demand, typically 300,000 to 500,000 square feet. He expects the property to be fully leased out between 12 to 14 months, though “you never know with a building this size if it’s going to get too 100% or not,” he said.
This is the fifth Sears/Kmart property acquired by ICP since 2014 and the second in the last week, according to a company release, the most recent being the former Sears distribution center in Groveport. In the last month, the company has added nearly 2.5 million square feet of Sears/Kmart properties to its portfolio, Semarjian said, including three stores.
The acquisition of the Perkins Jones property brings ICP’s total holdings in the Youngstown/Warren market to nearly 3.5 million square feet. Other properties include two Warren properties at 3566 Larchmont Ave. and 655 North River Road, as well as one at 3760 Oakwood Ave., Austintown, and 1789 Ellsworth Bailey Road in Lordstown.
“We’re accustomed to this neighborhood,” Semarjian said. “We’ve always had good luck because it’s just a fantastic area for business in the district.”
The company worked closely with the Youngstown/Warren Regional Chamber in making the transaction happen, said the chamber’s chief operating officer, Sarah Boyarko. While the chamber was disappointed when the distribution center closed in February, she said the organization looks forward to working with ICP in bringing new employment opportunities to the region, she said, as well as finalizing other projects in the near future. At its height, the distribution center employed some 900 workers.
“We look to work alongside Chris [Semarjian] and his staff to fill that facility with either one use or multiple companies in an effort to support those companies who are creating employment opportunities,” Boyarko said. “Of the current $1.5 billion of pending investment that the Regional Chamber manages, some of that could potentially go into that space in the future.”
ICP and the chamber have worked on projects in the past, including the acquisition of the former Delphi property at 655 N. River Road, she said. The chamber worked with ICP on courting Laird Technologies and Mellace Family Brands to move into that space. Such projects are part of the chamber’s ongoing efforts to bring new investors into the five-county region, she said.
“We try to look for those with the financial means to acquire properties and renovate individual properties or build new construction,” Boyarko said. “Chris is one of many capable property owners in our market that we work with on projects daily. We’re very excited about this acquisition.”
The area’s industrial base and location make it “a very good freight lane” for serving the Midwest and northwestern regions, Semarjian said. With projects like the regional HomeGoods distribution center being constructed by TJX Companies Inc. and the recent talks about the potential deal for Workhorse Group Inc. to purchase the idled General Motors Lordstown Complex, the area is seeing increased interest from investors in and out of the state, he said.
“We’ve never seen the activity level so high,” Semarjian said. “The business is sound. It’s good. The overall economy has an impact too, and things are going well with the economy.”
ICP’s in-house leasing team works with industrial companies and outside real estate brokers to court in- and out-of-state tenants, he said. The company currently has some 300 tenants in its portfolio.
As for the future, Semarjian sees “a tremendous amount of e-commerce activity” that could drive additional investments, he said. ICP is also building new “because the market is so tight for industrial space,” and has more than 900 development acres in its portfolio, he said. Its most recent project is the new corporate headquarters for ComDoc Inc. at 8247 Pittsburg Ave. NW in North Canton, near the Akron-Canton Airport, which broke ground in June 2018.
“They are moving in as we speak,” he said.
Copyright 2020 The Business Journal, Youngstown, Ohio.