CHAMPAIGN — Becknell Industrial, which builds manufacturing and distribution facilities for companies across the United States, is constructing its biggest facility yet — in Champaign, the city where it was founded.
That facility is a new 730,000-square-foot warehouse for Kraft Foods Group, immediately south of its plant at 1701 W. Bradley Ave.
Work on the warehouse — at the 32-acre site formerly occupied by Humko — began in November and is expected to be complete in the fourth quarter of 2014, said Daniel Harrington, chairman and CEO of Becknell Industrial.
When completed, it will free up space in the Kraft plant for further lines of production, company officials have said.
“The sheer volume of product inventory going through there is astounding,” Harrington said.
Most of the build-to-suit facilities Becknell has erected for industrial clients have been in the 50,000- to 500,000-square-foot range, Harrington said.
They’re mainly warehouse and distribution facilities, though some are for light manufacturing and assembly, he said.
Clients include such familiar names as TRW Automotive, Magna International, USG Corp. and Bimbo Bakeries.
In addition to building and leasing facilities to companies, Becknell Industrial has acquired industrial properties for lease. Today its portfolio includes about 100 properties totaling about 10 million square feet in 37 states.
Most of Becknell’s design and construction staff is based in the Chicago suburb of Lyons. Finance and accounting functions are located in a Carmel, Ind., office, and a sales office in Dallas opened about a year ago, Harrington said.
Much of the credit for Becknell goes to Nelson “Fritz” Hartrich, a contractor from the Chicago area who developed a relationship with Nabisco during the early 1970s and built several buildings for that company, Harrington said.
Hartrich moved to Champaign in the mid-1970s and collaborated with Newt Dodds in First Illinois Construction, Harrington said. That company built almost all the buildings in Champaign’s Interstate Research Park.
In 1985, Nabisco merged with R.J. Reynolds Tobacco Co. to form RJR Nabisco, and three years later, the company was acquired by Kohlberg Kravis Roberts & Co. in a leveraged buyout.
In 1990, RJR Nabisco decided it wanted to start leasing, rather than owning, its buildings.
Becknell Industrial was formed with the intent of leasing buildings to Nabisco, with Harrington handling the legal and financial side of the business and Hartrich handling the construction side.
Also brought in as partners were Harrington’s father, Thomas Harrington Sr., and Champaign businessman George Shapland. The elder Harrington died in August 2012; Shapland is a member of the board of directors of The News-Gazette Inc.
Becknell’s first project for RJR Nabisco was a 30,000-square-foot building in Duncan, S.C. The industrial developer then moved on to serve other companies, such as medical products supplier Owens & Minor.
In 2003, Becknell established an industrial park in Hobart, Ind., and later created one in Phoenix.
Harrington said Becknell Industrial plans to double its square footage — to 20 million square feet — in the next three to four years and eventually become a publicly traded company.
To enable the expansion, it’s developing a relationship with an East Coast pension fund adviser, Harrington said.
Nabisco merged with Kraft Foods in 2000, and Becknell has been working with Kraft since then — mostly on the cookie-and-cracker side of the business that last year was spun off as Mondelez International.
Kraft used a “direct store delivery” network to get some of its products to grocery stores, using branch warehouses. Becknell built some of those warehouses for Kraft.
In 2008, Becknell built the 40,000-square-foot Parkview Business Center on North Country Fair Drive to accommodate several tenants, including Kraft, which leased space there for its pizza division. That business has since been sold to Nestle, which continues to lease the space.
Harrington said typical leases on industrial buildings run for 10 to 15 years, and companies that lease “build-to-suit” facilities often renew those leases.
“The industrial market is very steady,” Harrington said, adding it’s not as volatile as the commercial leasing market.
Plus, building owners don’t have to make huge improvements when new tenants move in, as is often the case with commercial leasing, he said.
The market for industrial properties hasn’t been overbuilt and doesn’t have a lot of people speculating in it, he added.
Average occupancy in the industrial leasing market is about 90 percent, Harrington said.
Becknell Industrial has 98.5 percent of its space occupied, and during the recession, occupancy dropped as low as 94 percent, he said.