E-commerce Center Plugs into Douglasville

Author: Douglas Sams
Commercial Real Estate Editor – Atlanta Business Chronicle

Industrial materials giant McMaster-Carr Supply Co. is developing a more than $75 million regional headquarters and e-commerce center on a suburban campus just west of Atlanta.

McMaster-Carr is buying a little more than 100 acres along Riverside Parkway in Douglasville, where it will initially relocate its 600 employees and may add at least another 200 in the next several years. It could eventually house 1,000 on the campus.

The company carries more than 500,000 building products that it puts on display in a phone book-thick catalog. Order fulfillment will be a primary function of the new 700,000-square-foot project. It will also house about 80,000 square feet for administrative and support personnel.

McMaster-Carr has the option to expand to1 million square feet.

The company declined to comment on the project.

The Douglas County site is one of the last big pieces of land that once made up the planned New Manchester, a more than 2,000-acre mixed-use development conceived in the 1990s along Riverside Parkway and meant to attract emerging technology companies and high-tech manufacturing operations. Over time, Riverside became an industrial hub that has attracted the American Red Cross, the law firm Alston & Bird LLP, Medline Industries Inc. and other companies.

McMaster-Carr has distribution, too, but it’s really an e-commerce center blended into a corporate campus, said Ron Orr, one of the developers that owns the business park where the company is moving, now known as Riverside at Sweetwater.

Orr was one of the original developers of land along Riverside Parkway in the 1990s.

McMaster-Carr is building its project next to the 2,000-acre Sweetwater Creek State Park, which includes the ruins of a textile mill burned during the Civil War.

“We always saw this development as a corporate campus setting,” Orr said. “McMaster-Carr, like other companies out here, does not want visibility. It wants something very particular in its environment. It fell in love with this because the park can be picturesque.”

McMaster-Carr likes the lovely setting. Douglasville likes high-paying jobs.

McMaster-Carr’s employees have an average salary near $67,000, sources familiar with the company said. Douglasville is targeting those higher-paying positions to rebuild its employment base in the wake of the economic downturn.

“When you think about distribution operations, you might think about minimum wage jobs,” said Jeff Noles, executive director of the Douglasville Development Authority. “This is not that. This is the epitome of the types of jobs we are looking for. We aren’t just trying to improve the unemployment rate. We’re trying to boost the average wage rate.”

McMaster-Carr is relocating from nearby Fulton Industrial Boulevard. It had several reasons for making the move. Many of its employees are based in Douglas County, Orr said. It also wanted to be closer to logistics centers for United Parcel Service Inc. and FedEx Corp.

Its buildings on Fulton Industrial were also older and could not accommodate the campus-like setting the company wanted.

Some companies have started reinvesting in their regional headquarters projects again, including several on the outskirts of intown Atlanta.

Near Hapeville, Porsche Cars North America is finally racing ahead with construction of its new headquarters. The roughly $100 million project is taking shape on a portion of the former Ford Motor Co. assembly plant near Hartsfield-Jackson Atlanta International Airport.

In Dunwoody, State Farm Insurance recently bought the 10-story Hammond Exchange Building at Hammond Drive and Perimeter Center Parkway across from the Dunwoody MARTA station. State Farm paid about $44 million. It might consider building a regional hub on 13 acres of undeveloped land next to the tower, or choose one of several sites Perimeter developers are pitching.

In Duluth, Primerica Inc. developed a 345,000-square-foot build-to-suit project with Duke Realty Corp. It kept 1,600 jobs in Gwinnett County.

Fulton won’t be as lucky when McMaster-Carr leaves.

But, it could have been worse. Texas has been recruiting McMaster-Carr aggressively, people familiar with the effort said.

McMaster-Carr breaks ground on the project this month. It might take up to two years to complete.

Riverside at Sweetwater still has about 200 acres that can be developed on the farthest western side of Riverside Parkway.

Demand in the industrial sector has been tepid because of weak U.S. economic growth.

But there are some bright spots that portend better times ahead, according to Reis, a real estate market research firm. It cited the recovery of the housing and auto sectors. McMaster-Carr is probably a sign of things to come for build-to-suit development.

“You’ve seen such little construction over the past five years,” said Mark Hawks with commercial real estate giant CBRE Inc. “But, you’re starting to see projects like e-commerce change the industrial market.”