Hines, a prominent real estate firm based in Texas, is venturing into the development of a vast industrial park near Cape Canaveral in Florida. With the aim of capitalizing on the thriving aerospace industry, Hines is confident that companies like Blue Origin, led by Jeff Bezos, and SpaceX, founded by Elon Musk, along with their suppliers, will be willing to pay substantial rents for warehouses and manufacturing spaces in close proximity to launch sites. These facilities will serve as storage for rockets, space shuttles, satellites, and various components required for their construction and maintenance.
In collaboration with local developer Key Group, Hines has invested a staggering $500 million into this project. This endeavor highlights a notable shift in the real estate sector, as developers increasingly focus on niche industries to compensate for the challenges faced by traditional office spaces and retail establishments. Additionally, the growth of apartment rentals has slowed down, prompting property firms to explore alternative avenues for investment. Some have turned to building data centers to tap into the expanding field of artificial intelligence, while Hines has set its sights on the vast potential of outer space.
Ryan Wood, the managing director of industrial development and acquisitions at Hines for the Southeast region, expressed that the aerospace industry is rapidly growing and evolving. He believes that the real-estate industry has not kept pace with this emerging supply chain.
Transporting rockets and spaceships to launch sites via road or rail is a challenging task due to their size and cost. Additionally, the space industry requires a multitude of suppliers, which creates a demand for storage and manufacturing facilities in close proximity to launch sites.
This development not only addresses the logistical challenges but also highlights the transformation of a previously quiet coastal area east of Orlando. Hines and Key Group have acquired a 450-acre property in Titusville, conveniently located near the Cape Canaveral rocket-launch site. Their plan is to commence construction on three warehouses, covering a total area of 639,000 square feet, in early 2024. These warehouses are expected to be completed by 2025, as stated by Wood.
The companies said they are in talks with possible tenants but haven’t signed any leases yet. The total project will span around 3 million square feet.
SpaceX has launched rockets from Cape Canaveral, and companies such as Blue Origin, Boeing and Lockheed Martin have facilities nearby. Despite the booming space business, the area still has relatively little warehouse space, pushing up rents.
“It is very tough to find space out there right now,” said David Murphy, an executive vice president at real-estate brokerage CBRE. That makes the area appealing to developers despite higher interest rates, which have pushed up the cost of buying and building real estate.
In the race to cater to the growing demands of the space industry, developers are stepping up their game. Hines and Key Group are not the only players in the field, as Florida real-estate firm Onicx Group and Aries Capital have recently unveiled their plans to construct a massive 1-million-square-foot industrial park in Edgewater, located nearby. However, despite the interest in this sector, developers are facing obstacles due to high interest rates and stringent lending practices, making it difficult for many to make the numbers work.
Kathleen Yonce, the principal of Key Group, revealed that their search for suitable land near Cape Canaveral began back in 2019. After securing a lease agreement with the Titusville-Cocoa Airport Authority in 2022, the company enlisted the partnership of Hines this year.
Constructing warehouses for space companies presents its own set of challenges. Unlike handling Amazon packages, the dimensions of rockets require wider roads and greater distances between columns. Nevertheless, Yonce assured that, for the most part, these buildings will resemble any other warehouse.
This all looks like a sticky situation. Let us know what you think about the situation in the comments below.
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