The Need

An international $400 million adhesives and sealants manufacturer, and supplier to the aerospace industry, wanted to relocate its chemical distribution. They had regional operations in California, a state with increasing regulation on materials and processes, and they desired to move out of state. They also wanted to:

  • Optimize distribution logistics with West Coast customers
  • Create space for new manufacturing capabilities, recently obtained through acquisitions
  • Move employees out of a dated facility with an increasing lease rate 
  • Reduce overall tax burden

The manufacturer engaged Mortenson for a real estate assessment and market analysis of various out-of-state locations to establish an execution plan.

The Solution

Initially, Mortenson identified over 20 potential sites. By assessing the existing conditions of each site, the team gained better visibility into the best options to pursue. Two examples of this include:

  • An investigation on a site in a prime location revealed undisclosed undocumented fill material, which would have created foundation issues and an estimated $500,000 in costs to remediate.  
  • An assessment of another site showed unsatisfactory proximity to workforce housing and commute times, thus limiting the available talent pool. 

Once a site was identified, Mortenson developed various delivery options, including a build-to-suit lease, a turnkey purchase and an owner-financed option. For each option, Mortenson proved pricing, as well as associated risk and opportunity considerations.

Unlike other firms considered, Mortenson was an agnostic partner that helped the company identify and select a suitable site without bias towards any specific parcel of land. Mortenson was also fully flexible on the delivery model. This allowed for a recommendation that best suited the manufacturer’s cultural and business goals. 

Armed with full visibility, the company chose an owner-financed option in the recommended location. Mortenson supported the company through entitlements, programing, design and construction and was able to provide meaningful guarantees on total project cost and exact delivery dates.

The Result

The benefits of the new facility to the manufacturer include:

  • Closer proximity to customers, leading to just-in-time delivery, decreased costs of transportation and ability to provide even better service
  • Continued compliance with state regulations
  • Ample proximity to the local workforce, which increased the available talent pool
  • Space to implement new technologies and products (obtained through M&A) that will allow them to increase efficiencies, meet demand and maintain market share
  • State incentives totaling $221,000, which will help offset project costs 
  • Ability to shed lease rates of existing aging facility
  • Space to accommodate projected growth

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