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January 22, 2020 Deal Watch Today

Home Depot to operate $50M distribution center in South Windsor

Photo | Flickr/Mike Mozart A Home Depot store in Berlin.

Home Depot plans to open a major distribution center in South Windsor, adding a significant number of jobs as the nation’s largest home-improvement retailer tries to become a bigger player in online sales, precipitating a need to get closer to its stores and customers for next-day or even same-day delivery. 

Indiana developer Scannell Properties is currently building the $50-million, 421,000-square-foot distribution facility on vacant land in South Windsor that will be leased long term by Home Depot upon completion, sources confirmed to HBJ.

The combined 46-acre property is officially located at 360 Ellington Road, 245 Chapel Road and R008 John Fitch Boulevard.

Town officials and design professionals representing Scannell did not name any potential tenants during the local approval process last year. 

A spokeswoman for Home Depot on Tuesday confirmed its long-term lease with Scannell, but declined to provide additional details about the company’s expansion in Connecticut.

Home Depot currently operates about 30 retail stores in Connecticut. It also operates a distribution center at 74 Griffin Road South in Bloomfield.

"This [planned development] is part of our investment strategy to speed up delivery to customers and stores, eventually reaching 90% of our customers with same day/next day delivery,” the Home Depot’s spokeswoman said in a statement.

In August, the town's Planning and Zoning Commission approved a special exception for the planned development. Weeks later, the town council unanimously greenlit a seven-year tax abatement for Home Depot as an incentive for the retailer to invest approximately $50 million in the distribution center.

The abatement reduces the estimated property assessment by 50%, resulting in an estimated tax benefit of $309,925 a year, or $2.7 million over the seven-year agreement, town records show. Meantime, the town is expected to receive about $300,000 in annual tax revenue from the building, according to Town Manager Michael Maniscalco. The vacant property in recent years has generated just $19,000 annually in tax revenue for the town, Maniscalco said.

The abatement was granted for Home Depot because the property will eventually change hands in the coming months, he said.

“It’s very helpful for us as we consider delivering services to our community,” he said. “The service demand for a facility like this will create a fair amount of revenue. I think it’s a huge benefit for the community.”

Construction crews broke ground on the Home Depot site in recent weeks, and are expected to complete the project by year-end, Maniscalco said. The property sits across the street from another Scannell project -- a $42.4 million Coca-Cola office and distribution facility at 329-359 Ellington Road. The town also approved a tax abatement for that project.

Officials have said the Home Depot facility will likely mirror a warehouse-distribution facility Scannell built in Cromwell. It’s not yet clear how many jobs the facility is expected to create.

The Home Depot distribution hub is different from the 182,000-square-foot distribution and accompanying 69,5000-square-foot storage facility that Scannell is planning to build at 240 Ellington Road. The town’s zoning board in recent months approved that project, but Scannell has yet to name the incoming tenant there.

Home Depot’s investment in Connecticut comes as the retailer has been spending large sums of money to become a bigger player online. However, the plan is not working as they had hoped, according to a CNN report.

In late 2017, Home Depot announced it planned to spend $5.4 billion to integrate its brick-and-mortar stores with its digital operations.

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