Winston-Salem City Council is being asked to approve a third $2.5 million economic development loan to Front Street Capital, this time for a speculative building in the Union Cross industrial hub.
The city said in a legal notice Thursday that the developer wants up to $2.5 million — typically a five-year, interest-free loan — to construct a 144,000-square-foot speculative building on Lot 4 of the business park.
The loan would be repaid in full either by a tenant occupying the building or by the sale or refinancing of the building.
A public hearing is scheduled for February 6 at 6 p.m. in the council chambers of City Hall, 101 N. Main St.
According to Front Street’s request, the building would be marketed to “out-of-area businesses looking to relocate to Winston-Salem.” Construction is expected to begin in the first quarter and expected to be completed within 24 months.
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In return, Front Street expected the economic development project to generate an initial investment of $15.7 million “with additional investment in future tenant improvements.”
Among the loan stipulations offered by the city – which are similar to the two previous loans – are:
* Contract with local minority and women’s contractors and sub-contractors “where possible;”
* Hire local residents, including qualified ex-offenders and re-entry candidates “whenever possible”; and
* Require any new tenant or purchaser of the facility to commit to making an additional capital investment of at least $1 million in the facility over a period of five years from occupancy or purchase of the installation; set up and operate in Winston-Salem for at least five years; and create at least five new jobs within five years of occupying or purchasing the facility, with each job paying a minimum of $15 per hour and providing health care benefits.
Previous loans
In September 2020, the board approved a loan of up to $2.5 million to Front Street to construct a 250,000 square foot speculative building within the Union Cross Industrial Center.
This building was designed to initially serve as a temporary site for the Ardagh Group, as a 610,000 square foot Union Cross distribution center was under construction at Park at 74 – one of the largest speculative industrial buildings in the Triad.
In November 2020, council voted unanimously to annex over 100 acres along Wallburg Road slated for the Union Cross industrial hub. The speculative building was established for a 13-acre site on the west side of Wallburg Road.
In July 2022, Front Street completed the $64 million sale of the 610,000 square foot building on 42.8 acres at 4501 Wallburg Road.,
The facility was purchased by Union Cross GT LLC, a joint venture involving Galaxy Investments LLC and Halle Acquisitions of Silver Springs, Md.
The logistics facility has been tenanted by The Ardagh Group since April. The company said it plans to have up to 40 employees at the plant.
According to the latest loan application, Front Street expects to repay the $2.5 million no later than the first quarter. The repaid loan would be used to provide the currently requested loan.
The council also gave Front Street a $2.5 million economic development loan in 2018 for a speculative building in the Union Cross industrial hub, which development came to fruition in 2019 after just 16 months.
Front Street officials told the council that having a building ready for a tenant is essential in the competitive field of industrial recruitment.
“Without such a product available in our local inventory, our city and county will lose many potential projects that bring a net new tax base, jobs, and overall economic diversification,” company officials wrote to the city.
“Given the current market activity and intense competition for every project, we as a city cannot afford to miss out on these economic drivers due to a lack of available modern facilities. or sites ready to go.”
Busy developer
Front Street has been one of the Triad’s most active commercial and industrial property developers in recent years.
Front Street has redeveloped what was once called Building 23-1 in downtown Winston-Salem in Bailey South, along with the Morris Building, for nearly 100,000 square feet of office and retail space.
Earlier in January, a Front Street affiliate paid $8 million to buy a 71.7-acre site from the city of Winston-Salem. The property is listed as 0 Union Creek Road. The transaction also included a 0.68 acre parcel at 1618 Union Cross Road.
The property will be occupied by Ziehl-Abegg Inc., a manufacturer of motors and fans for commercial ventilation systems, which in November selected Winston-Salem for a $100 million expansion.
Ziehl-Abegg will occupy a new 500,000 square foot building between the Caterpillar Inc. manufacturing plant and Glenn High School.
The company establishes its North American headquarters there and moves production from Greensboro. He announced his intention to grow from 200 to more than 500 employees.
In August, Front Street sold two industrial properties for a total of $36.9 million to Westcore, a San Diego industrial real estate group entering the Triad.
The Union Cross Industrial Center properties include: a 200,000 square foot facility on 21.5 acres at 4991 Millennium Drive which sold for $21.6 million; and a 140,000 square foot building on 11.17 acres at 4980 Millennium Drive that sold for $15.27 million.
Bunzl Distribution USA Inc. opened a $13.4 million factory at the 4991 Millennium site in 2019. The factory site has the capacity to add 110,000 square feet of space. Southern Carlson, a manufacturer of fasteners and hooks, is the tenant at 4980 Millennium.