A 303,000-square-foot speculative industrial building planned for the city's south side will be about twice the size of any other such facility recently built in Janesville.
Constructing something so large without having a secure tenant is a big risk and big investment, and it requires a lot of faith that the Janesville market will continue to flourish for years to come, a city official said.
The Janesville City Council approved a tax increment financing agreement Monday night that clears the way for the building.
In the agreement, the city will provide $2.4 million spread over 10 years to help TI Janesville II construct the facility on an 18-acre site at the northwest corner of Beloit Avenue and Highway 11. The developer is a subsidiary of Milwaukee-based Zilber Property Group.
The building will generate about $12.7 million in new value for the site, bringing the property value to about $13 million, according to a city memorandum.
In a separate move Monday, the council amended the boundaries of the surrounding TIF district so the site would be included. That move requires approval by the joint review board, which is scheduled for Wednesday.
Once the project earns final approval, construction will begin almost immediately. City Economic Development Director Gale Price expects crews to start work next week and finish by the end of the year.
The new building will be marketed for either distribution or manufacturing. It will be located just east of a former John Deere warehouse now owned by Zilber and leased to Generac, Price said.
Part of the new building will cover the site of a former flea market that John Deere sold to Zilber earlier this year, he said.
Price called the speculative facility a “build-to-suit situation.” Crews will construct the building shell and could make interior modifications once a tenant signs a lease, he said.
The building eventually could house one or two tenants.
Considering most local speculative facilities range between 100,000 square feet and 150,000 square feet, Zilber’s desire to build bigger reflects the company’s belief in the area economy, Price said.
This will be Zilber’s first new project in Janesville. The neighboring Generac site is the only other building it owns here.
The Rock County Development Alliance had a working relationship with Zilber and recruited them to Janesville. Zilber bought the old John Deere warehouse in August 2017 and soon inquired about additional development on site, Price said.
Janesville has a recent track record of getting projects finished and finding the necessary labor force to fill new positions. That makes the market attractive, he said.
The Gazette was unable to reach a Zilber representative Tuesday.
Speculative buildings can be risky for investors. They are spending money to construct large facilities without anyone promising to move in, Price said.
Developments such as this one historically meant getting plans approved first, then signing a lease and starting to build. But a shift toward more distribution in U.S. manufacturing has reduced the amount of vacant warehouse space available, Price said.
“It’s challenging because in the traditional world, banks like to see a tenant lined up,” he said. “But in the competitive world of economic development, you really need to have the site under construction in order to convince site selectors you’ll be able to bring the property to market on time for the tenant.
“It’s a very different world than where we were at 10 years ago.”