Warehouse in East Hempfield Township sold for $31.8 million
Strong demand for distribution centers and the value of having a long-term lease in place are major factors in the 33% increase in sale price for a Landisville-area warehouse in less than three years, says a Lancaster County commercial real estate expert.
Boston-based real estate investment firm High Street Logistics Properties acquired the 251,000-square-foot warehouse 701 Stony Battery Road last month for $31.8 million, $7.9 million more than the seller, TA Realty, another Boston-based real estate investment firm, paid for the property in March 2022.
High Street owns distribution centers in 13 states, including another East Hempfield Township warehouse at 2910 Old Tree Drive and two warehouses in the Conewago Industrial Park.
Packaging Corp. of America operates a corrugated sheet plant at the site, according to its website.
The building is one of three warehouses built along Stony Battery Road since 2020, each about a quarter-million square feet in size. All three have changed hands in the years since. 601 Stony Battery Road sold for $23.7 million in 2021, and for $30.5 million later that year. 791 Stony Battery Road sold for $28.9 million in July 2022.
Scott Bradbury, senior vice president of sales and leasing for U.S. Commercial Realty in Manheim Township, said that the sale price of the buildings is likely due to them having long-term leases in place.
Bradbury, who did not work on the sale of 701 Stony Battery Road, said that real estate investment firms like High Street are willing to pay more for properties with long-term tenants in place. Longer leases mean more cash flow and return for their investors.
"You're paying for the lease, much less the property," he said.
Bradbury said the growing value of the properties also reflects strong demand in the region for large distribution centers serving e-commerce businesses, and limited buildable industrial land available in Lancaster County.
Along the Route 283 corridor, for example, Panattoni Development Co. is currently building a 399,000 square-foot warehouse at 403 S. Chiques Road, and has proposed a 1 million-square-foot warehouse in Mount Joy Township.
Bradbury said that before the Stony Battery Road warehouses were built, their location just west of the Hempfield School District campus wasn't seen as an obvious location for large distribution centers because they don't have direct access to Route 30 and Route 283. The warehouses were also built on "spec," or speculation, without tenants lined up.
"It was like, these guys must know something. Apparently they did, because it worked out," he said.
High Street Logistics Partners, TA Realty and Packaging Corp. of America did not return calls seeking comment.
