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Improving Economy Spurs New Construction Including Food & Beverage Industry Growth

July 2014

Benuzzi’s Industrial Guide

By: Jeff Raday, P.E., President
McShane Construction Company

As reported in the July 1, 2014 Associated General Contractors of America (AGC) report, total construction spending in the U.S. has risen for the third straight month, representing increases in both private non-residential and public construction. However, construction activity continues to grow at an inconsistent pace by month and even by market sector type. This uneven activity pattern is predicted to continue for the balance of 2014, remarks Ken Simonson, AGC’s chief economist.

The most recent figures tabulated by the Census Bureau indicate a third straight month of construction volume increase in the U.S. totaling $956 billion, a 6.6% increase as compared to May 2013. In fact, positive increases have been noted throughout the first five months of 2014 with total spending increasing by 8.2% as measured against this same period last year.

AGC’s report further indicates that the largest private sector growth occurred in power construction – with new work on oil and gas fields and pipelines, as well as electricity projects, up 30% as compared to 2013. Surprisingly, a significant growth in office construction weighed in at 23%, although that segment is not anticipated to continue at that notable pace. Other private commercial segments that also clocked increases include retail, warehouse and agricultural projects that climbed 6.5% in the last year while the manufacturing sector rose 6.7%. In fact, one segment of the manufacturing/industrial industry – the food and beverage sector – continues to mark cautious but steady progress.

Food & Beverage Industry Rebounds
The U.S. food and beverage industry stands at its most positive level since 2008. Capital spending within this market is up 14.9% over 2013 and budgets are up 26.2% over last year’s numbers. Food manufacturers are feeling optimistic about the nation’s economic recovery and continue to evaluate opportunities for new facilities and upgraded environments. Given this positive momentum, real estate and construction professionals also have reason to share in the enthusiasm as capital investments are anticipated to increase throughout the balance of 2014 and into 2015.

Over 37% of food and beverage firms are looking ahead to a brighter future and anticipate the onset or continuation of capital spending with more than half of the companies budgeting double-digit increases. Food processors are paying careful attention to 2014’s critical manufacturing issues that could have major implications on the direction of capital investments. This year, capacity constraints are frequently mentioned by food and beverage processors together with food safety, cost control, the Food Safety Modernization Act (FSMA), and the need to upgrade and improve warehousing and logistics operations.

Other important factors influencing capital investments within the food and beverage industry are the changing trends in today’s consumer food preferences. Food and beverage companies are continuing to shift their focus toward adult millennials by providing more health-focused food options to satisfy the growing number of individuals seeking a healthier lifestyle. With these changes, increased investment is necessary to support the number of new products being launched that require retooled production lines or separate processing facilities to accommodate growing volume. There is also a growing requirement to create an environment that produces food products more safely, efficiently and with the highest level of technology, not readily achievable within aging plants with limited capacity in structure and function.

Producers are engaging in more sustainable manufacturing techniques that have become increasingly favored since consumer trust and accountability have taken an even greater precedence in the industry. Improvements to sustainability include overall energy efficiency, lighting upgrades, minimizing carbon impact, reducing the cost of waste that erodes a company’s bottom line and a greater overall corporate responsibility. Many of these green improvements can be achieved through a comprehensive renovation program as well as new build-to-suit opportunities designed and constructed with sustainable intent.

A Local Appetite for Growth
Situated at the center of this positive momentum in the food and beverage industry is the geographical midsection of the country (Chicago and the Midwest region), where many producers are utilizing capital improvements to bolster their positions in the market and gain new business. The Chicago area has consistently ranked as a premier location for food production and distribution and has enjoyed the steady return of this industry and its capital pursuits. McShane Construction Company has been privileged to witness this rebound firsthand as it has been recently selected to serve several high-profile food and beverage clients with their capital improvement projects. Some of these notable assignments include:

Golden State Foods Regional Headquarters and Logistics Center
Recently completed by McShane Construction, the 165,230 square foot, LEED-Gold Regional Headquarters and Logistics Center for Golden State Foods in McCook, Illinois, illustrates an example of the growing sustainability initiative spreading throughout the food and beverage sector. As one of the largest diversified suppliers to the foodservice industry, McShane constructed Golden State Foods’ build-to-suit utilizing sustainable features and materials to achieve its LEED-Gold objectives. The 40′ clear, cross-dock facility offers 52 external docks and 54,000 square feet of dry storage space together with a two-story, 32,340 square foot corporate office. The new build-to-suit is equipped with a sophisticated freezer/cooler component utilizing a C02 cascade refrigeration system maintaining cooler storage and dock staging at 34°F and freezer storage at -10°F. As part of the assignment, McShane Construction also completed a separate on-site maintenance facility and generous parking for both vehicles and trailers.

NFI Real Estate’s Beverage Distribution Center
In order to expand capabilities for its national clientele and to optimize regional warehousing and logistics operations, NFI Real Estate, a division of NFI Industries, sought the expertise of McShane Construction Company to complete a 77,000 square foot build-to-suit beverage distribution center. Located in Minooka, Illinois, the fully air-conditioned facility features a contemporary warehouse component designed with a 32′ clear height, 10 truck docks, one drive-in door, an ESFR sprinkler system and a 3,600 square foot office area. The site design and facility configuration have been maximized to accommodate future expansion of the building to best support NFI’s growing beverage distribution logistics and warehousing services.

DO & CO Chicago Catering, Inc.
McShane Construction was recently awarded the comprehensive renovation assignment for DO & CO Chicago Catering, Inc., an international catering and foodservice firm expanding its services to O’Hare International Airport. This internationally renowned firm will provide first-class, in-flight food services to Emirates airline passengers. McShane is currently completing the renovation of an existing 102,065 square foot building in Des Plaines, within minutes of O’Hare International Airport, to establish this new contemporary food preparation facility. McShane Construction is transforming the existing building with an extensive renovation and reconfiguration of interior spaces that includes an entire kitchen build-out, a new office area with a conference room and reception area, the complete replacement of the HVAC system and the addition of two exterior docks. Upon completion, the facility will feature a 24,416 square foot production area, 69,142 square feet of storage space, 1,254 square feet of office space and a 7,253 square foot staging area with 10 dock doors. In order to accommodate the immediate production needs of the client, McShane Construction is also constructing temporary kitchens and food preparation areas allowing the facility to become operational one month prior to final turnover.

As capital investments increase and new construction and renovation opportunities continue to grow, McShane Construction Company remains a leading provider in delivering comprehensive construction and food and beverage specialized facilities to support the evolving needs of its clients.

Jeff Raday serves as President of McShane Construction Company, one of Chicago’s and the country’s most active full-service construction firms with a growing portfolio of projects within the warehouse/distribution, food and beverage, multifamily, office, healthcare, retail, educational and institutional sectors. He leads McShane’s construction activities on a national basis including its headquarters in Rosemont, Illinois and regional offices in Auburn, Alabama, Irvine, California and Phoenix, Arizona.

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