An Indiana industrial park attracts and retains tenants by offering rail access and ample opportunities to expand.
TWO KEY MEASURES of a successful industrial park are its ability to attract tenants and those tenants’ ability to expand. At Lebanon Business Park (LBP) in Lebanon, Indiana, Duke Realty has accomplished both.
Lebanon Business Park is a multitenant industrial development that was conceived in the mid-1990s. Jim Acton, then mayor of Lebanon, had a vision to attract businesses to his community, which is located along Interstate 65 between Indianapolis and Chicago. Once he realized the value of partnering with a developer to make that vision a reality, Acton began talking with Duke Realty, a national commercial real estate company headquartered in Indianapolis, a mere 20 minutes away.
For Duke Realty, embarking on a new industrial development in Lebanon offered several advantages. First, the company was running out of land to be developed at Park 100, its premier industrial park in Indianapolis, which limited opportunities for new customers and expansion by existing tenants. Second, Lebanon’s location was outstanding — right on the major north-south route between two of the Midwest’s largest cities. Finally, Duke Realty saw great benefit in working with a community leader who was a strong advocate of business growth.
Strategically located along I-65 between Chicago and Indianapolis, Lebanon Business Park is the only rail-served master-planned industrial park in central Indiana. It features 22 Duke Realty-delivered facilities, with acreage available for another seven to 10 buildings.
In 1994, Duke Realty secured approximately 650 acres of land along I-65 between two highway exits, state Route 32 and state Route 39. The city of Lebanon designated the area as a TIF (tax increment financing) district to fund the park’s infrastructure, including roads, sewers and utilities. A few months later, Duke Realty delivered its first building in LBP, a 576,000-square-foot building for MacMillan Publishers, a company that remains at the park today.
Long-Term, Growing Tenants
Over the years, Lebanon Business Park has grown to 1,250 acres through multiple transactions. Today, 17 Duke Realty-delivered buildings feature approximately 7.9 million square feet of industrial, manufacturing and distribution space. In a testament to the park’s strengths, the majority of the businesses that were the original tenants in these 17 buildings remain, and nearly all have expanded their operations at LBP. Only one of Duke Realty’s buildings at the park was a spec structure; all of the others were build-to-suits. (An additional three buildings at the park were built by other developers.)
Lebanon Business Park continues to offer advantages to businesses looking to establish operations in the Midwest. When Duke Realty began to develop the park, the company anticipated that it would appeal to companies looking for a site with highway access. Most companies have, indeed, located at the park because of its setting along I-65 between Indianapolis and Chicago and the area’s strong labor force, as well as the city of Lebanon’s business-friendly policies. These include the approval of outside storage, which several other communities had opposed when CNH Global NV, an international manufacturing company, first started looking for a site in central Indiana. (CNH now operates three buildings at LBP.) But what has kept them there has been the opportunities the park offers for tenants to expand within the park.
D-A Lubricant Co. Inc., an Indianapolis-based firm that provides commercial liquid lubricating products, selected Lebanon Business Park and Duke Realty for its build-to-suit manufacturing and warehouse facility in 2011.
In the past year alone, three of the park’s largest tenants have expanded there. Purity Wholesale Grocers, a company with operations in LBP since 1996, invested in a new 480,000-square-foot regional distribution center on 29 acres. Purity chose Duke Realty to construct its newest facility in 2013, making it the third building transaction between the two companies. Purity’s first building was a 500,000-square-foot facility completed in 1996. In 2012, the company expanded by 150,000 square feet. In both 2012 and 2013, the company expanded onto land it had purchased at the park earlier, to accommodate expected growth.
The product support division of CNH Global NV also continues to expand in LBP.) In 2013, the company raised its total presence in the park to 1.2 million square feet in three buildings with the lease of an additional 153,000 square feet of space. In 2003, Duke Realty delivered two build-to-suit structures for CNH; one is 842,000 square feet and the other is 250,000 square feet. CNH has found the park’s location ideal for product shipments because of its highway access and proximity to Indianapolis International Airport (only 26 miles away), where the nation’s second-largest FedEx hub is located. In addition, FedEx offers late pick-ups in LBP.
Hachette Book Group, a customer since 1995, is the third existing tenant to expand at LBP recently. With the 218,000-square-foot expansion of one of the two build-ings it leases, Hachette now occupies 1.4 million square feet of space. Hachette leases Building 9, a 395,679-square-foot structure, as well as Building 2, which it has expanded three times. The first, 308,000-square-foot expansion was in 1999; the second, 309,225-square-foot one was in 2008.
The rail spur that Duke Realty brought into Lebanon Business Park in 2011 now brings raw materials directly to D-A Lubricant’s facility.
Gerry Cummings, senior vice president with Hachette Book Group, spoke to LBP’s appeal: “Since we relocated our operations to Lebanon Business Park in 1995, we have found this to be an ideal location for the distribution of our products. Plus, Duke Realty has been very responsive to our space needs.”
Other Park Perks
Recognizing that an increasing number of businesses rely on rail transportation for receiving raw materials and distributing finished products, Duke Realty, working with CSX Transportation, the city of Lebanon and the Boone County Economic Development Corporation (EDC), elected to bring rail service directly into the park in 2010. Discussions about the rail spur began in 2005. No other master-planned business parks in the area offered rail service.
Duke Realty viewed this opportunity as a differentiator that could meet the needs of some companies. The EDC supported the idea. The city of Lebanon bore a portion of the cost of the approximately $2 million rail spur, which was completed in November 2011; Duke Realty and an LBP tenant covered the rest. Thanks to the addition of the 13,000-linear-foot rail spur, which connects to an existing CSX branch line on the south side of LBP, the development is now a fully functional rail industrial park. This gives manufacturers, retailers and third-party logistics providers convenient access to incoming and outgoing shipments while also enabling them — and their customers — to enjoy the cost savings associated with direct rail service.
Two companies, United States Cold Storage and D-A Lubricant Co. Inc., have taken advantage of the direct rail service by building facilities on more than 100 acres adjacent to the rail spur. U.S. Cold Storage’s building is a 300,000-square-foot refrigerated warehouse and logistics services facility for the perishable food industry that was built in 2008. D-A Lubricant’s 225,000-square-foot facility, which Duke Realty delivered in 2011, includes a state-of-the-art blending/processing area, a technical lab area and a rail door, in addition to 11 dock doors. Both U.S. Cold Storage and D-A Lubricant were attracted to LBP by the rail service, which they use for delivery and distribution of products. Both companies own their buildings. In addition, two food-related companies, Skjodt-Barrett and Maplehurst Bakeries, moved into the park because of their business connections with U.S. Cold Storage.
Another benefit offered by LBP is its designation as a foreign trade zone (FTZ). Companies engaged in importing and/or exporting goods into or from the U.S. thus can reduce, defer or eliminate duty payments on component materials and finished goods.
Twenty years after it was first developed, Lebanon Business Park has enhanced the local community through the creation of roughly 2,200 to 2,600 jobs, according to WorkOne Central Indiana, and significant tax revenue. Room for additional growth remains: Duke Realty owns or controls 303 acres that can support up to 5.2 million square feet of space in seven to 10 newly developed buildings.