With only months to go before a major tenant wanted to turn the lights on at an Enfield warehouse, industrial developer Adam Winstanley was still looking for a set of switchgear, or controls for the building’s power system.
For a set of switchgear that normally costs about $75,000, Winstanley found a manufacturer to make the equipment for $450,000 – and was happy to sign the check.
“We felt fortunate to honestly pay $450,000 for it because you can’t find these units anywhere,” Winstanley said. “It’s because the resins and all the different parts come from all over the world and they just can’t get this equipment right now – it’s a big problem for all industries.”
Supply-chain issues around switchgear and other materials have added risks and higher costs to development despite a strong market for industrial space in the state, Winstanley said.
He spoke to an audience at the Great New Haven Chamber of Commerce’s Big Connect on Thursday on the topic of “Opportunities in the Industrial Area in the New Haven Market.”
Dale Kroop, the former Hamden economic development director, moderated the discussion.
Brother to high-profile New Haven developer Carter Winstanley, Adam Winstanley focuses on warehouse and other major commercial projects across the region, ranging from light industrial properties to “last mile” distribution centers for clients like Amazon and FedEx.
In addition to supply chain issues, inflation has bumped the cost of his projects from an average of $110 per square foot several years ago to $170 per square foot today, Winstanley said. The escalation in costs and anticipation of an economic downturn has caused some pullback in the market, he added, with FedEx killing three recent facilities planned for Massachusetts.
Many towns and cities in Connecticut have also soured on industrial development, scuttling at least eight industrial projects in the state in the last 60 days due to a range of concerns, according to Winstanley. Permitting and zoning issues have become more complex, with added environmental reviews delaying or dooming new development.
In some areas, more opportunity lies in brownfields, or sites contaminated by earlier industries. With the state eager to fund cleanup of brownfields, Winstanley said that developers can benefit if they take a longer-term approach.
“Communities are going to look more favorably if you tackle the tougher project – brownfields are sitting there and they’re there waiting to be redeveloped,” Winstanley said. “It is more work and it’s more effort; it could be more legal expenses. But I would argue that from a permitting standpoint, it’s going to be faster and easier.”
But beyond the challenges, Winstanley said he saw a strong market for industrial space across the Northeast, with new growth set to come from European manufacturers seeking lower-cost facilities close to strong workforces and utility grids and far from conflict zones like Ukraine.
“Manufacturing is coming back to the U.S. aggressively right now,” Winstanley said, adding that he has had a growing stream of inquiries from European companies seeking space in New England in the last six months.
“A lot of companies that went to China are now pulling back, and they’re adding more manufacturing plants [in the U.S.]. So I think manufacturing is coming back to Connecticut, it’s happening right now,” Winstanley said. “The whole country is seeing a lot, but there’s going to be a lot in the Northeast because of the technical skills that are here, labor is really productive. Companies like the Northeast.”
Contact Liese Klein at lklein@newhavenbiz.com.
