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A zoning fight over warehouse space rankles Huron Township

A year ago, Huron Township put the brakes on construction of any new warehouse or distribution space after approving two large new buildings on an old horse-racing track.

But now the developer constructing those buildings totaling 1.27 million square feet for Inc. on the former Pinnacle Race Course site wants to build another one there — this one 450,000 square feet for a Home Depot distribution center after receiving a request from the home improvement giant late last year.

The issue has boiled over at the township board, where trustees — in defiance of a unanimous planning commission recommendation — on Wednesday night narrowly granted the developers — Detroit-based Sterling Group and Texas-based Hillwood Enterprises LP — an amendment to the township’s zoning rules that allows them to build the new structure for Atlanta-based Home Depot on 60 acres of the remaining 400 acres of the property.

Among the issues to become better understood during the warehouse/distribution building freeze were things like the impact of truck traffic on the southern Wayne County community as well as other issues.

As a way to mitigate concerns over truck impact, the township and Sterling/Hillwood, plus Wayne County, have proposed a revised Sibley Road design that would discourage truck traffic and be more attractive to other commercial, retail and pedestrian uses, according to a memo from John Enos, the township’s community development director.

The $8 million to $9 million cost for the road’s redesign and construction would be paid by the developer and Wayne County.

The redesigned road would include things like narrower lanes, limited turnaround capabilities for large trucks, pedestrian crossings and other features that would limit truck traffic.

That doesn’t quell some of the anger over the project, however.

‘Truck City’

The 4-3 township board vote on Wednesday night flies in the face of a unanimous 9-0 planning commission recommendation in July to not approve the amendment that allows the new building, which would be built at the northeast corner of Prescott and Wahrman roads.

Planning commissioners said Sterling Group and Hillwood previously signed a resolution agreeing not to further develop warehouse/distribution space beyond the Amazon buildings on the Pinnacle site, which spans some 650 acres. They also said reversing course paves the way for future backpedaling, and that the amendment is “not justified by a change in conditions.”

A former planning commissioner, RP Lilly, who served on the commission from 1998-2008, questioned the precedent during a public comment session on Wednesday night.

“I cannot remember in my 10 years of experience (on the planning commission) of a township board ever refusing to acknowledge a 9-0 recommendation from the planning commission,” Lilly told township board members. “You might be able to set a record for yourselves if you upset that.”

A current planning commissioner, Debbie Musallam, wondered why the commission’s unanimous recommendation was being ignored.

“If you’re not going to listen to us, you might as well put a bunch of mannequins up there and do what you want anyways,” she said.

One woman who addressed the board but didn’t give her name believed the township’s reputation was at stake.

“If you vote for this thing, you will be known as the ones who made Huron Township ‘Truck City,'” she said.

Hot commodities

Enos, in an interview, said the township is aware that it has finite amounts of land for industrial development and called warehousing and distribution space — hot commodities given the growth of Amazon and the accelerated shift toward online shopping — “more of a low hanging fruit in terms of uses that are being proposed in Southeast Michigan.” “From the township’s standpoint, they felt they had a good amount of that and, with the approval of Amazon, they would want to provide areas in the township — the remaining 400 or so acres (of the Pinnacle site) — for other types of industrial development,” Enos said.

Of the 6.4 million square feet of new industrial space under construction in metro Detroit in the first quarter, the most recent for which data was available, some 5.7 million square feet was warehouse or distribution space, according to a report from the local office of Newmark Knight Frank, a New York City-based brokerage.

The market has a vacancy rate of just 4 percent, and the asking rents are $5.27 per square foot per year. In southern Wayne County, where Huron Township is located, warehouse/distribution space commands slightly less, about $5.22 per square foot per year.

Danny Samson, chief development officer for Sterling Group, told the township board that after dispelling what he called “a fair amount of misinformation,” some “folks have been open minded, have been able to understand that what we are talking about is not doomsday and can be very contributory and beneficial to the community beyond the simple tax base.”

And Jeremy Caddy, the township treasurer, echoed that there was “misinformation.”

“I’m going to cut to the chase and be brutally honest. There is a lot of misinformation … My fear is if we don’t control the rules of the game on this property now and we deny this, we are getting manufacturing, high impact manufacturing, they’ll get a tax abatement …” Caddy said.

A big deal

Amazon, the Seattle-based e-commerce behemoth, was revealed as the user of a pair of new buildings — one totaling 516,760 square feet and another totaling 752,400 square feet — on the former Pinnacle site in December. The buildings, located at 33700 and 33701 Prescott, were to cost at least $47.4 million.

That construction cost is about $37.35 per square foot. At that rate, a 450,000-square-foot building for Home Depot would cost about $16.8 million.

In December 2019, the joint venture between Sterling Group and Hillwood finalized a $4.9 million purchase of the 650 acres of land that used to be the Pinnacle Race Course.

Post It Stables Inc., the previous Pinnacle owner, failed to redeem the land from tax foreclosure earlier that year. The race track was open 2008-10 and it had been listed for sale for $8 million several years ago. The county spent $26 million during the Robert Ficano administration putting infrastructure to the site to get the track open.

Hillwood, which is run by Ross Perot Jr., did not respond to an email last week. A message was sent to Sterling Group seeking additional comment.

The two Amazon buildings were sold as part of a $2 billion deal — reportedly the largest U.S. industrial deal by total cost during the COVID-19 pandemic — to a joint venture between San Francisco-based Stockbridge and the National Pension Service of Korea.

The deal overall includes 23 logistics buildings totaling 14.3 million square feet across the country, according to a press release.

Warehouse boom

The Home Depot building would be the latest large warehouse to crop up the last few years in metro Detroit.

Most notably, Amazon has well north of 10 million square feet built or under construction in places like Huron Township, but also Detroit, Pontiac, Shelby Township, Romulus, Hazel Park and elsewhere.

Speculative projects have also been built or are under construction or in pre-construction phases in places like Lyon Township, Shelby Township, Harper Woods and Detroit.

Kansas City-based Flint Development is proposing 2.3 million of speculative space at the former Ford Motor Co. Wixom plant site as well as on about 45 acres in Pontiac on land owned by defense contractor Williams International Co. LLC.

Another developer, Riverside, Mo.-based NorthPoint Development LLC, has town down the former Cadillac Stamping Plant in Detroit so it can erect a 682,000-square-foot building in its place. NorthPoint is also working on projects in Warren at a former General Motors Co. property as well as the Eastland Center property in Harper Woods.

Ashley Capital, based in New York but with an active office in Canton Township, also has several projects in the pipeline and underway.


Posted By: Crain’s Detroit Business on August 8, 2021.  For more information, please click here to read the source article.

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