With the demand for warehouse space surging, largely because of swelling e-commerce sales, D.C.-area office and residential building owner Penzance is diversifying its portfolio with its first investment in a large industrial space project.
Penzance will build a 825,000-square-foot warehouse in Williamsport, Maryland, near Hagerstown, with direct access to Interstates 81 and 70, two key highways used to transport good along the East Coast and across the nation.
The 53-acre development, at 16220 Wright Road, is a speculative project, meaning there are no tenants committed to the space, but Penzance is confident there will be demand.
“Penzance has been looking for the right opportunity to invest in industrial for a few years,” said Chris White, managing director of investments at Penzance.
“The unique opportunity to build Class A industrial space within the strong performing 57-million-square-foot industrial I-81 corridor, paired with the change in shopping habits and a renewed focus on domestic supply chains resulting from COVID-9, influenced our decision to move forward with the spec warehouse investment this year.”
White said the company is looking to attract large national tenants.
The warehouse will include 217 trailer drops and 495 parking spaces, and has the potential to create hundreds of jobs in Washington County, Maryland.
Commercial real estate firm JLL forecasts demand for industrial space, including warehouses and distribution facilities, which will mean the need for an additional 1 billion square feet of it by 2025.
JLL calls industrial real estate “red hot” and the investment asset class of choice for developers currently.
E-commerce sales in the U.S. are expected to grow as much as 30% in coming years.
“We have historically attributed as much as 35% of industrial leasing to e-commerce,” said JLL President of Industrial Services Craig Meyer. “Currently, as much as 50% of our leasing activity can be attributed to e-commerce related operations.”
Penzance has tapped JLL to handle leasing of the new warehouse.
D.C.-based Penzance, with management offices in Arlington and Reston, Virginia, owns and operates more than 40 office and residential buildings in the D.C. region.