$140M in Development Planned Near Houston’s Ports
Duke Realty Corp. has acquired about 161 acres of land near the Port of Houston with plans to pump $140 million into the development of up to 2.9 million square feet of industrial space. The acquisition also includes a 12-acre container/chassis storage yard, and a 172,000-square-foot, fully leased industrial building on in the Cedar Crossing Business Park in the Houston suburb of Baytown. Duke’s planned development will be named FairPort and will be designed to accommodate up to 2.9 million square feet of industrial space within six miles of both Barbours Cut and the recently constructed Bayport container terminal (pictured), which are both part of the Port of Houston system. Duke expects a total investment of $140 million in this development over the next seven to eight years. The project will break ground this year or early 2009. The portfolio acquisition also included five industrial buildings in the Norfolk and Seattle markets. Powers Holdings L.L.C. of Savannah, Ga., was the seller. Financials in the deal were not disclosed. The acquisition is part Duke’s strategy for seeking opportunities at U.S. ports, according to a Duke spokesman. The Houston-area properties are part of a plan to establish a presence in the port sub-market. Houston’s industrial market is well positioned to attract more traffic directed away from West Coast ports through the Panama Canal. Although activity is far short of the robust pace experienced at the end of the last expansion cycle (when vacancy fell below 4 percent nine years ago), local economic growth will continue to generate healthy industrial absorption in 2008, according to a fourth quarter by Grubb & Ellis Research. The market is experiencing positive net absorption, which reached nearly 1.1 million square feet during the fourth quarter, pushing the yearly total to a robust 7.5 million square feet. The lion’s share of quarterly growth occurred once again in warehouse and distribution properties with 842,000 square feet of black absorption ink as the year-to-date figure climbed to over 5.9 million square feet, according to the Grubb & Ellis report. With the addition of this portfolio, Duke expands its portfolio of port assets, which already includes nearly 5.2 million square feet of industrial product in Savannah, Ga., and its new development near the Port of Baltimore called the Chesapeake Commerce Center. The company has also recently opened offices in Seattle, Washington and Southern California’s Inland Empire to explore prospective developments in those port markets. Duke Realty specializes in the ownership, construction, development, leasing and management of office, industrial, medical office and retail real estate. It is the largest publicly traded, vertically integrated office/industrial real estate firm in the United States. The company owns, manages, or has under development more than 142 million rentable square feet in 22 major U.S. cities. Duke also controls more than 7,700 acres of land for more than 113 million square feet of future development.