GlobeSt.com: Will you be spending as much on development and investment this year as last year?
Phillips: I suspect less. We're waiting for pricing to come back to reality. There are buildings now on the market we're going to take a look at, but you've got to be careful about overpricing. We're looking for properties with good, basic market underwriting. Those are out there but not in abundance. There's a lot of turbulence in the capital markets, which is causing a lot of people to stand at the sidelines and wait to see what's going to happen.
GlobeSt.com: In terms of acquisitions, will you focus on investment or development?
Phillips: Historically we've had an appetite for both, but I think our biggest focus will be on moving forward with developments already in the pipeline. We will be looking for existing properties to which we can add value and some infill opportunities, but the market doesn't offer a lot of opportunity for acquisition now. Basically, leasing is going to be key to 2008.
GlobeSt.com: What kinds of properties are you looking for?
Phillips: Buildings with land for expansion or additional development would be something we would entertain, anything where we can unlock value. In terms of development, we generally like sites where can do maybe one large distribution building and some multitenant. This way we cover a lot of bases. We're going to go for LEED on some of our bigger projects because that's where the markets are going, but for smaller buildings we'll have to see. We like to let the market rather than site dictate what we buy and develop. We want to maintain optimum flexibility.
GlobeSt.com: Which markets are you focusing on?
Phillips: All the markets we're in, we'd like to look for more. Chicago has in some submarkets worth looking at, but not all. The O'Hare submarket is coming into a lot of product and is a bit overpriced. That's not a market we would choose. We've been active in the I-55 market. We're working through some existing projects there and have land in contract along I-80 where we could do bulk product. We have a project in Waukegan (IL) starting construction this year, two multitenant buildings, and we have a park in Mt Pleasant (WI) that will have a bulk building plus some multitenant. We also have a project under way in Baton Rouge (LA), Port Allen, two buildings totaling about 500,000 sf. We got some pretty incredible incentives from the city and parrish as a result of the Katrina catastrophe.
GlobeSt.com: Will you be looking at new markets?
Phillips: We're interested in Jacksonville (FL), Memphis, Nashville, Louisiana and Texas. Then there's Cincinnati, Columbus and Cleveland. We already have projects there, but we like those markets.
GlobeSt.com: What is your overall assessment of the current situation?
Phillips: We're pretty bullish. Maybe not about the next six months, but the 12 months after. We're a laggard type of industry. Decisions about what's happening today were made 12 to 16 months ago, so you can't always judge by the present. We've always got our eyes and ears open for new opportunities and we always seem to find them. HSA has always has a lot of irons in the fire.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
