Johnson & Johnson Selling 65-Acre Industrial Site

Since the late 1970s, Johnson & Johnson has manufactured Tylenol and other over-the-counter pharmaceuticals at the McNeil Consumer Products plant on Interstate 35 at Chandler Road in Round Rock. Now the pharmaceutical giant has decided to abandon the 175,000-sf, $14-million plant, which is still in use, and build a new facility in Puerto Rico.

What makes the potential deal different from most, says Coddington, is the fact that Johnson & Johnson is willing to consider a two-year leaseback arrangement with a potential buyer. That means that a buyer could continue to have a tenant to defray costs during the expense process of redeveloping the property. The plant occupies only 20 acres of the site.

"If you're a developer, the most frightening part of the transaction is, 'How long am I going to have to bear the tax burden of this property? What am I going to do with no assets?' In this case, you've got a credit-quality tenant paying you rent and covering your taxes and operating expenses while you find your own tenants," he tells GlobeSt.com.

Few corner tracts exist in the high-growth corridor between Round Rock and Georgetown. The land is located on the southeast corner of the freeway and Chandler Road just south of the proposed site for the Scott & White outpatient clinic. Coddington speculates the site has strong potential for a multi-use development of retail and office space, with or without the plant.

Austin has a long history for the redevelopment of industrial sites, says Coddington, pointing to the former Texas Instruments campus and the former IBM campus in north Austin now known as The Domain. Both sites have gone on to see rebirths as either office parks or industrial parks. "These were both tenant single-use facilities that turned into something very different," he says.