Centrum Properties, the Chicago-based builder/developer best known for its residential high-rises, late last month started work on its first industrial-to-industrial renovation project in California, a $23 million upgrade and modernization of the SFO Logistics Center, a distribution facility in South San Francisco.
It’s not like Centrum is losing interest in residential. Last year it purchased property and started construction on 450 residential units that will total 480,000 square feet, as well as another 800,000 square feet in urban mixed-used projects. However, Centrum also started 130,000 square feet in neighborhood retail projects and 624,000 square feet in industrial projects.
“A lot of people know us because of our high-rises and condo conversions in Chicago and Florida, but what they don’t know is that we’re also a prolific retail developer,” says Michael McLean, Centrum’s vice president of development. He points specifically to Centrum’s Roosevelt Collection mixed-use project in Chicago, whose first phase includes 500,000 square feet of retail on 20 acres.
Centrum has done a good deal of industrial redevelopment, such as the Montgomery Ward campus in River North in Chicago, where it converted 3.5 million square feet into a multi-use master plan on 30 acres. But only recently has it diversified into industrial rehab, with the 572,000-square-foot SFO Logistics project being its largest to date, and its first in the Golden State.
“The logistics center is a unique opportunity to take an existing building and add value to the property,” says McLean. The tenants are likely to be private-sector companies servicing the city’s burgeoning biotech industry. (In a prepared statement, Centrum notes that as more logistics companies move into the refurbished SFO center, commercial real estate for the city’s biotech business zone across the highway — where South San Francisco already has more than 8 million square feet of biotech office space — will become available for those and other companies to expand.) McLean says Centrum is upgrading this facility, which sits on 26 acres, to be a “true business campus,” with new roads and infrastructure.
Centrum and Angelo, Gordon & Co. — a private equity firm with which the developer has worked for a dozen years and has done over $600 million in projects — purchased this property from the General Services Agency last August for $36.5 million. They won out over at least three other bidders in an online auction that went on for more than three months.
Centrum is now leasing space and going through the permitting process (South San Francisco requires a use permit). McLean says his company expects to have its permit by the second quarter of this year and to complete the rehab within six months after that.
John Caulfield is a senior editor with BUILDER magazine.