Milwaukee developer Zilber Property Group continues to leverage its success in building and filling large-scale distribution warehouses in Janesville.
When it completes its latest project—another proposed, 300,000-square-foot warehouse in the city’s south-side business park—Zilber will own and lease almost 1.9 million square feet of warehousing space in Janesville.
As Zilber continues to position itself as a dominant player in logistics in Rock County, the city of Janesville has awarded the company its third tax-increment financing deal for what will be the fourth new warehouse space the company has built on speculation over the last two years.
The Janesville City Council voted Monday to award Zilber a “pay as you go” tax-incentive deal worth about $1.16 million—including a gift of 24 acres of city-owned, industrial park land at 401 W. Venture Drive for $1.
Janesville Economic Development Director Gale Price pointed out to the city council this week that developers in Rock County are “7-0” with large-scale commercial developments—100,000 square feet or larger over the last six years.
By that, Price means that most of the warehouse spaces that Zilber and others have developed in Janesville landed tenants even before developers finished building them.
In 2020, Zilber capped off a 303,000-square-foot industrial and warehousing space at 3020 Beloit Ave. that is now mostly filled with tenants. That project was awarded a similar $2.4 million city TIF deal.
Earlier this year, Zilber launched another buildout in the same spur off Beloit Avenue: two 178,000 square-foot warehouses which the city awarded a similar $1.5 million, pay-as-you-go TIF deal and land transfer.
Price said Zilber’s interest in developing warehouse spaces in Janesville comes under a continued COVID-19 era boom in distribution of goods via semitrailer truck.
Even at its completed warehouses, Price said, Zilber continues to see requests by distributors for more space to park and maneuver semis in and out of distribution center lots. That’s a testament to the rampant demand for the shipment of goods by truck that has grown during the pandemic.
The reason the city continues to get involved in helping finance the warehousing projects, Price said, is that demand for new space continues to be strong even as almost all existing local industrial space continues to be occupied.
Price said Zilber’s aim is to get its fourth new warehouse space at 401 W. Venture Drive built and ready for tenants by the end of 2022. He indicated Zilber likely already would have brought the development pitch to the city earlier this year, but a shortage in supply of commercial construction steel delayed the development’s launch.
He said the city worked up its latest TIF deal with Zilber in part because industrial site selectors who seek to move fast on leasing property are now hunting for projects that are under active development.
Earlier this fall, Zilber bought 500,000 square feet of existing, industrial facilities, most within the city’s south side business park. At the time, the company said in a statement it was picking up the properties to continue to ride a wave of demand for more distribution and warehousing hubs along the Interstate 90/39 corridor in Rock County.
James Otterstein, who leads economic development for Rock County, told The Gazette in an email that he predicts that distribution and warehousing developments in Janesville and throughout Rock County will remain hot over the next half decade.
Otterstein said what has not changed is that Janesville and Beloit are located along a major Interstate corridor that connects to the bulk of the upper Midwest in just a single day’s drive. That makes the corridor an attractive spot for developers and site selectors.
What has changed? The state Department of Transportation has finally completed a multiyear lane expansion project to boost the I-90/39 corridor between Beloit and Madison from four lanes to six—and eight lanes through Janesville.
That improves prospects for continued industrial development along the corridor, including warehousing.
“Several of the boxes and nameplates that planted themselves in Rock County during the last decade did so in part because of the value-added benefits created by the third Interstate lane,” Otterstein said.
Otterstein believes that much of the large-scale warehousing properties in Rock County eventually will become owned by national or international holding companies or distribution firms.
That would be a shift from past development strategies in Janesville that have focused on public-private developments between the city and local developers. The shift, Otterstein believes, will bring a more varied cast of industrial tenants to Janesville.
Otterstein said he believes that like Zilber, other developers will gradually shift toward building larger and larger warehouses along corridors. In the coming decade, it won’t be suprising to see warehouse developments that routinely tilt toward the 500,000-square-foot to 1-million-square-foot range.
Such growth will continue to draw down on business park land held in store by municipal governments, 10 acres, 15 acres or 25 acres at a time.
That’s something that local government, economic development officials and developers are aware of, and in Janesville, it prompted the city earlier this fall to buy an option on 129 acres of farmland off the I-90/39 corridor just south of the Dollar General distribution warehouse complex off highway G.