Austrian Industrial Warehouse Developer in the Southeastern United States
Since the mid-twentieth century, major industries have been relocating to industrial parks located on once open farmlands far from the urban core. To accommodate the needs of these industries, large-scale warehouse facilities have been designed and built to serve as storage-, logistic- or distribution centers of manufactured products.
Founded in 1984 by native Austrian Ferdinand Seefried, Seefried Industrial Properties, Inc. in Atlanta, Georgia, has gained recognition as one of the leading industrial warehouse development companies in the United States. Seefried Properties enjoys significant development and operational relationships with several of the largest Industrial Real Estate Investment Trusts (REIT’s) in the United States.
The company builds and leases approximately 5 million square feet per year for its foreign and institutional clients. Seefried has developed over 40 million square feet of both speculative and build-to-suit distribution facilities. The company leases and manages 12 million square feet for third parties, 92% of which is industrial warehouse space and 8% is office space; tenants include Fortune 500 companies like PetSmart, Home Depot, Verizon, Siemens, and Kuehne and Nagel.
With headquarters located in Atlanta, Georgia, Seefried Properties has expanded its operation to 6 other regional markets in the U.S. including Chicago, Phoenix, Dallas/Ft.Worth, Orlando, and the Greater Washington D.C./Baltimore areas. Focusing on locations near airports and targeting the transportation and international freight forwarding sectors, Seefried Properties accommodates 20 of the 25 world’s largest companies.
In an interview with Austrian Information, Ferdinand Seefried explains how his career in the U.S. began, the development and growth of his company and the development of Austrian businesses in Georgia and the Southeast, which he has followed closely for 20 years as Austrian Honorary Consul General.
How was it that you came to the U.S.?
I studied business administration in Munich and initially worked 4 years for one of the largest U.S. stockbrokers, W.E. Hutton, in Munich, which gave me some exposure to America. Sometime later a group of Austrian and Bavarian entrepreneurs asked if I would like to work for them acquiring real estate. I accepted the offer and moved to America where I worked for Transatlantic Consultants from 1977 to 1983 buying existing real estate, which essentially went into the portfolios of life insurance companies and real estate funds.
It was during that time that I learned the commercial real estate business and established myself in Atlanta, as I purchased my first real estate assets, 2 office buildings in this southeastern city. I could have chosen other Sun Belt cities like Dallas, Houston or Miami, but with luck I started in Atlanta at the right time.
Your company has an impressive number of tenants both from the U.S. and abroad, many of them from Europe. What is the procedure for companies wishing to build or lease a warehouse?
Most companies, manufacturing as well as distribution companies, have in some form or other numerous warehouses in America. Some, like Home Depot or Target, have dozens of warehouses. There are 20 to 25 national warehouse developers in the U.S., many like my own firm, who build warehouses in the distribution hubs of the U.S.
There are two models for developing warehouses: either a building is preleased or a building is built on a speculative basis and leased during construction or after completion of construction. For example, if Siemens needs a warehouse they normally approach one of the international real estate brokers and commission them to look for a warehouse in a specified area. The following questions are typically asked: can the broker find a suitable existing building or is the development of a new building required? The broker goes to different warehouse owners or developers (and might also approach Seefried Properties) and submits a call for bids with detailed specifications. The developer who can offer the best combination of cost and performance and in the most suitable location is usually the winner.
In what way does the warehouse industry differ in Austria compared to the U.S.?
In America warehouses are leased by the user whereas in Austria and other European countries the majority of industrial firms prefer to own their own warehouses. American companies want to be flexible, enlarging or reducing their space needs and avoiding getting stuck with a particular warehouse. One of the risks of ownership is that the timing of a planned disposition might not be good, and in an economic downturn the sale might be almost impossible. That can result in a bad experience. In reality, there are few users who would like to own, and most tenants rely on developers to deliver buildings on schedule and within the proposed budget. Even European companies in the U.S. tend to lease. Exceptions are those users that focus on manufacturing and improve the warehouses with expensive equipment. In such a case, the warehouse is usually only a small fraction of the total investment, and ownership becomes important because of the value of the improvements.
And what about environmental standards; do they play a role in the decision-making process?
The LEED Certificate confirms that the construction, and in particular insulation, is environmentally friendly, meeting the different categories of LEED requirements. LEED certification also facilitates the marketing of a building. Certain companies say that they attach importance to complying with environmental standards, leasing only buildings having a LEED Certificate.
What have been the results of last year’s economic and financial market crisis?
Since 2007 rents have decreased by 20% to 25%. The value of warehouses has also fallen because of declining rental income and rising capitalization rates. The volume of investment in warehouses has declined and also the amount of new construction. Over the last 15 years, the average yearly construction volume of new warehouses in the U.S. was 210 million square feet. The prognosis for 2010 is that only 30 million square feet will be built, indicating a retraction of over 85%.
Having left Austria many years ago, do you still frequently visit Austria? And to what extent has your experience with Austrian business culture been decisive in regard to the way you run your real estate business in the U.S.?
I am in close contact with my family who lives in Gresten, Lower Austria, south of the Danube, and owns a forestry operation. The manner in which my family business is managed has strongly influenced my view of business culture. I have tried to incorporate certain ideas into my U.S. business, and that has paid off. I don’t have the fluctuation of employees that many U.S. companies experience. I have employees who have been with our company 10 to 15 years, something which is unusual in America. I would trace that back to having established an atmosphere which is positive and employee friendly. It encourages more loyalty. Happy employees are not only a result of good remuneration, but also of job satisfaction.
As Austrian Honorary Consul General you have followed the development of Austrian business in Georgia over the last twenty years. Wherein lies the attraction for European firms to do business especially in the Southeastern part of the U.S.?
The center of activity in the Southeastern part of the U.S. is Atlanta, and European firms have established themselves there primarily because its location is excellent, and the business climate is favorable. You can fly from Atlanta to anywhere within the U.S. The second aspect is that doing business in Georgia is relatively inexpensive compared to New York, Chicago, Los Angeles, or most other areas in the U.S., and is also less regulated. Only 5% of Georgia companies are unionized. Even the automobile industry in Georgia is non-unionized. This is an important aspect for European companies. In the 70’s and 80’s many European companies settled in Georgia, including Austrian companies. Presently we have 21 Austrian companies in Georgia. However, after 1991 Austria concentrated on achieving a stronger share of the market in Eastern Europe, during which time the U.S. market lost somewhat in terms of priority.
Lakeside Ranch Park, Dallas, TX. Seefried Properties
Siemens. Seefried Properties
Home Depot. Seefried Properties
Mr. Ferdinand Seefried founded Seefried Industrial Properties in 1984 to develop industrial real estate, focusing on locations near airports and targeting international freight forwarding and transportation companies. The company has developed 40 million square feet of industrial properties during the past 25 years and is managing as of mid 2009 12 million square feet of warehouses.
Prior to starting Seefried Properties, Mr. Seefried served as an executive for Transatlantic Group, a European based real estate advisory group. Mr. Seefried holds a master of business administration degree from the University of Munich. Ferdinand Seefried has represented his native Austria since 1989 serving as a Honorary Consul General of Austria for Georgia, Alabama and Tennessee. Moreover, he is a member of the Capital City Club Atlanta, and holds a Director position in the Buckhead Coalition, Atlanta. Mr. Seefried is also a member of the Advisory Council of Emory University, Department of German Studies.