Toledo, Ohio is getting a federal cash infusion targeted toward the electric vehicle (EV) market. On July 11, 2024, the U.S. Department of Energy awarded $32.6 million in grants to American Autoparts and Mobis North America to convert the existing Stellantis Toledo Assembly Complex’s chassis assembly plant to an EV battery facility and to construct a new EV battery plant in Toledo.
The funds, part of the $1.7 billion Investing in America initiative, aim to keep “at-risk” or closed auto manufacturing facilities open. The national initiative targets manufacturing and assembly plants in Georgia, Illinois, Indiana, Maryland, Michigan, Ohio, Pennsylvania, and Virginia so that they can be retooled and expanded to supply the nation’s growing demand for EVs.
Specifically, the $32.6 million in Ohio is earmarked to allow American Autoparts to convert its internal-combustion chassis assembly plant at Stellantis into a facility that can assemble chassis for plug-in-hybrid-electric and internal combustion engines (PHEVs). The other funds are designated to help Mobis North America build a battery system assembly plant which will be located at the Toledo Trade Centre Industrial Park.
GPRS has particular experience with retooling and expanding facilities for the renewables/EV manufacturing industry. In 2023, we mapped the entire underground infrastructure at a Midwest plant to aid in its retooling and expansion for EV component production. Our utility locating and mapping, video pipe inspection (VPI) services, GPRS’ in-house Mapping & Modeling Team, and our cloud-based data delivery platform, SiteMap®, played critical roles in helping to expand the production capacity for EVs in the Midwest. We’ve also been involved in expanding the EV charging network throughout the country – from providing subsurface mapping for retail charging stations to clearing the site for a solar EV charging carport project in California.
Back in Toledo, the new and retooled facilities are expected to create 185 new jobs for EV battery manufacturing, specifically PHEV SUVs, PHEV light trucks, and PHEV minivans. The deal also saves 345 UAW jobs and adds 38 additional auto workers to produce the new PHEV light truck.
How Does Building on Spec Work?
According to the City of Toledo’s Director of Economic Development, Brandon Sehlhorst, the decision to engage in speculative building by enticing a national real estate developer, NorthPoint Development, paid off. NorthPoint constructed an industrial park at the site of the old North Towne Square Mall that attracted Mobis.
“The city has been working very hard over the past few years to reposition that site into a future economic development engine… It is no longer sufficient to have a site that is just ready for development. Having a speculative building is the best thing a community can do to attract a business,” Sehlhorst told The Toledo Blade.
As commercial real estate firm, Cushman Wakefield, states in its Midwest Speculative Construction Report, subtitled If You Build It, They Will Come, “Speculative construction is by its very definition, a risk. Many developers wonder: if we build it, will tenants come?”
According to the 2022 report, 259 million square feet of modern distribution space were constructed “on spec” between 2016 and 2022. Their 2024 Q1 report, however, marks the sixth straight quarter of reduction, and a total of approximately 250 million square feet in new speculative builds.
At speculative construction’s height in Q3, 2022, even the “conservative speculative development market” in Cincinnati, Ohio built 25 million square feet on spec with 28 developers in that same time period. Columbus, Ohio created 77 buildings on spec with a total of 32.9 million square feet built by 39 developers.
Speculative construction is simply the idea of the development of industrial or residential spaces by creating the variety of buildings a developer expects potential customers to want to lease or purchase.
Since 2022, however, speculative construction projects in the Midwest have cooled from their zenith, but they are far from over, as Toledo’s project proves.
“This is all going according to plan,” Sehlhorst said. “It couldn’t be working out any better.”
The project’s anticipated total cost is $65,235,758. Mobis North America and American Autoparts will be matching the federal funds with an additional $32,617,879 to complete the retooling and expansion. Mobis sunk $13.8 million into the project in 2023.
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Frequently Asked Questions
How do you get a developer to build on spec?
To get a developer to build on spec, you should clearly outline the project's vision, provide comprehensive details and potential benefits, and establish trust through a proven track record or credible references.
What kind of incentives do speculative builders want?
Speculative builders typically seek incentives such as financial guarantees, profit-sharing opportunities, and assurances of market demand to mitigate risks and ensure potential returns.
What is the average square footage of a speculative construction project and what are they most often used for?
The average square footage of a speculative commercial construction project typically ranges between 10,000 to 50,000 square feet and is most often used for office buildings, retail spaces, and industrial facilities.
