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Harvey, Hanna building NNC’s first large warehouse since 2014

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Harvey, Hanna & Associates has broken ground on the first 100,000-square-foot industrial building to be constructed in Delaware since 2014. Built on spec, the warehouse industrial building in the Delaware River Industrial Park in New Castle will be ready for occupancy in early 2018.

Delaware has only 117 industrial properties that are 100,000 square feet or larger, and only three have been built in the last 10 years, according to CBRE. The latest was the 183,000-square-foot Fed Ex building in New Castle, built in 2014.

The new construction is the first spec building in almost 10 years for Harvey, Hanna, but COO Thomas J. Hanna said it is warranted because their warehouse vacancy rate is at an all-time low of just over 4 percent, and warehouse rents are up 11 percent year-over-year in the county.

“Supply is really, really tight, and demand is really up for warehouse space,” Hanna said. “What’s driving it is a paradigm shift of retailers leaving the shopping malls and selling online. The market demand is such that new construction is wanted. We anticipate the building will be leased during construction.”

Hanna said building on spec was a necessity in New Castle County, because many clients want to come to Delaware but they are no longer willing to deal with DNREC and New Castle County permitting.

“Right now it is easier to build in Manhattan than it is in New Castle County,” Hanna said. “It took us two years to get our approvals and hundreds – hundreds – of thousands of dollars in design costs and submission fees. Businesses just won’t wait that long. You almost have to build on spec.”

The corporate community has come to identify Delaware as a jurisdiction that takes extraordinarily long for land-use approvals. Tenants say they can’t wait,” Hanna said. “Many of them have come to know that our land use regulatory environment is so strict that Delaware just doesn’t make their list.”

He said he’s hopeful that will change under new County Executive Matt Meyer, who has promised improved customer service for contractors and others. “I’m hopeful and I’m confident that Matt Meyer and his leadership team will reopen New Castle County for business,” he said. “The county has been closed for business for quite some time.”

Hanna believes his native Delaware, centrally located and crisscrossed by major highways, could become a logistics center if permitting and DNREC regulations did not create a time-consuming bottleneck.

“Amazon gets a lot of press because it is sort of the brand name in e-commerce goods, and they are forecasting a 30 percent increase in their leased warehouse space in the upcoming 12 months,” he said. “There is no doubt they are part of the demand in the warehouse sector but they are not the only ones who have a robust online platform and are looking for warehouse space.”

Delaware is attractive to the national and regional companies because of its central location and highway access, its low property taxes, the low cost of doing business, its renowned Court of Chancery and its skilled labor force, he said.

“The logistics industry can be a very, very strong source of growth for Delaware because of our workforce. Those people who lost their jobs at Chrysler and GM when those plants closed and the people who were downsized in the Dupont Corp., a lot of those folks are still here. They didn’t go away. If we’re wise about handling it, logistics can really provide a source of employment for those people,” Hanna said.

His companies’ New Castle County warehouses, which generally rent for about $5 per square foot, are home to Fortune 500 companies like Canada Dry, a mom-and-pop QVC fulfillment center and fast-growing clients such as PODs, Speakman Co., Iron Mountain, Zenith Products and Tire Rack.

Before the recession, Harvey Hanna was building 200,000 square feet of new warehouse space every year and the market was absorbing it, but the company went almost 10 years with no new construction until now. The company has plans to grow pretty quickly in all three industrial parks over the next few years, according to Ryan Kennedy, director of marketing.

Harvey Hanna already owns 2.58 million square feet of warehouse, distribution and logistics space in the Delaware, ranging from 5,400 square feet to the 430,000-square-foot former Five Below distribution center in their Twin Spans Business Park in New Castle.

With a management team stacked with native Delawareans, Kennedy said Harvey Hanna has a dual aim as they fill their space. “We don’t look at it as just trying to fill up a building. We look at it as, at the same time, trying to make an impact on our local community. We do this almost as industrial development -bringing in new companies and new jobs,” he said.

Hanna added: “We are homegrown Delawareans. We believe in Delaware. We would absolutely continue to invest in Delaware if we were assured the regulatory process were to become more cooperative.”

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