Tuesday, August 05, 2008

Spec Buildings

By coincidence, we were selling one of our older spec buildings on the same day that we were announcing the start of our newest one. It is especially coincidental when you consider that this newest one is only our seventh since we started the company. We’ve run Agracel since its humble beginnings as a highly risk controlling and mitigating enterprise and the word spec (short for speculative) sends shivers up my spine. Instead, we’ve concentrated on new build to suits when we’ve got a long term lease in place as fitting better into our conservative financial model.

But, there are compelling reasons why it sometimes makes sense to build a spec building, especially when the economy is expanding and there is a shortage of existing buildings. We’ve found that about 80% of companies looking to expand would prefer an existing building that they can move into quickly and several towns have used spec buildings as a lure to bring in a new manufacturing plant. That’s our goal with our newest spec building that I’ll tell you about tomorrow.

Today, I want to tell you about our first five spec buildings, all done in the 90s and all in the state of IL. Each was the same design (40,000 sf) and done in conjunction with the local community having buy-in on the building and its promotion. We wanted them with “skin in the game” if we were going to risk our capital or as I told them, “If I’ve got a prospect in town on a Saturday afternoon, I don’t want the mayor to say ‘Jack who?’”

Of the five, four have been virtually continuously occupied since they were completed. The exception was one that we completed at a small airport shortly before 9/11. Talk about bad timing!

The Greenville, IL spec building was occupied by a local manufacturer for a number of years until they added onto their existing plant, while we were continuously promoting it to new manufacturers. On Thursday we closed with El Milagro, which will expand the building into their main corn receiving and processing facility for their Chicago tortilla plant.

El Milagro was started by Raul Lopez in 1950 after he immigrated to the USA from his native Mexico in 1942. Orphaned at eleven, he lived with his uncle in Mexico City but dreamed of being a bullfighter, which forever earned him the nickname of “El Torero”. He began work as a laborer on the Illinois Central RR, starting El Milagro as a part time endeavor. Only when the business achieved a size that could support his growing family of 12 did he quit the railroad to run the business full-time. Today, seven of his children are involved in day to day operations of the rapidly expanding business.

And, we’re thrilled that they bought our spec building, creating dozens of jobs and offering an alternative, premium market for area corn farmers in the Greenville market. That’s why we built it in the first place.

You never know where these job creators are going to come from. Or what they are going to produce!

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