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PATTERSON, CA-McShane Development Co. has landed a major build-to-suit deal with W.W. Grainger, the publicly traded purveyor of facilities maintenance supplies that rang up $6.9 billion in sales in 2008. Grainger has acquired 46 acres within McShane’s KeyStone West Business Park here in an estimated $60-million deal that includes the design and development of Grainger’s first major West Coast warehouse-distribution facility. Both companies are headquartered in Illinois.

The 820,000 square-foot, high-cube distribution center is expected to be up and running in spring-2011 with 40,000 square feet of office space, McShane senior vice president John Dobrott tells GlobeSt.com. Work is set to begin in September. The facility is designed to be expanded by 180,000 square feet. The remainder of the property will allow for parking 400 cars and 87 trailers.

McShane is a national real estate development, design-build and general construction company that is currently developing a couple of dozen properties around the country. The 122-acre KeyStone West Business Park, its only development in California, is being development in partnership with MetLife Real Estate Investments. The deal with Grainger, which soaks up half of the business park’s available land, is one of the largest build-to-suit development deals in the US this year.

Dobrott declined to confirm the total value of the agreement or break it down in any way but local industrial specialists tell GlobeSt.com that the going rate for land is in the low $200,000s per acre and that construction costs for warehouse distribution space with a 5% office build-out would be in the range of $60- to $70 per square foot. Based on those numbers, the land price would have been around $10 million and the development deal would come in around $50 million.

Grainger has been operating in California for 75 years and currently has 50 sales outlets in the state but it has always shipped products from the Eastern US. Grainger regional manager Brian Williams says the new distribution facility in the Central Valley will allow it to deliver more of its products on a next-day basis to its Western US customers while also reducing its transportation costs.

McShane’s design/build construction services team for Grainger’s LEED-registered West Coast distribution headquarters includes architect Ware Malcomb, civil engineer Kier & Wright Civil Engineers & Surveyors Inc., and LEED specialist GAIA Development. CB Richard Ellis handled both sides of the negotiations, with its Industrial Properties Solutions team representing McShane and Stephen Salomon, Tyson Vallenari and Douglas Norton with the San Francisco office representing Grainger.

Grainger’s facility will rise next to similar facilities for Kohl’s and CVS. McShane also recently completed a 530,000 square foot warehouse at the park on a speculative basis. The building is currently 20% leased.

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