Candy Manufacturer Leases Largest Spec Warehouse Ever in Texas
- Jan 13, 2009
Flying in the face of a downtrodden industrial market, the biggest spec warehouse building ever to grace the state of Texas has found a tenant to occupy the facility in its entirety. Candy manufacturer Farley’s & Sathers has signed on to occupy Duke Realty’s Grand Lakes II (pictured), a 1 million-square-foot structure off I-30 in Grand Prairie, approximately 15 miles west of Dallas. Having signed a long-term lease with Duke, Farley’s will relocate operations from two facilities totaling about 500,000 square feet in neighboring Arlington to the year-old Grand Lakes II in March. Carrying the address of 3953 Gifford St., Grand Lakes II is the second building to be erected at the 130-acre Grand Lakes master planned industrial park. Duke completed the first structure, the 750,000-square-foot Grand Lakes I, in 2006; it is presently 75 percent occupied. And there’s room for more. Grand Lakes can accommodate a total of approximately 2.2 million square feet of industrial space. Farley’s relied on Leon Brothers Real Estate for representation in the deal, while Duke’s Curt Hefner stood in for the ownership. The deal represents a major coup for Duke and for the greater Dallas/Fort Worth market, which closed the year with a 20.8 percent vacancy rate, according to a report by real estate services firm Grubb & Ellis. “The greater southwest submarket has the largest concentration of spec industrial space in the Dallas/Fort Worth area,” Jeff Thornton, senior vice president of Duke’s Dallas operations, told CPN. “We had a lot of spec space that delivered in 2008, and at the same time, absorption decreased by 30 percent. The market for mega distribution centers has been the first to go away; it’s gone quiet.” However, all is not lost for Dallas/Fort Worth industrial. “Absorption has come down, but it has not come down to the point of dire straits,” Thornton noted. “The market for 50,000 to 250,000 square feet seems to remain very active. So going into 2009, a lot of absorption will come form the smaller to intermediate leases.” Regardless, Duke is taking a wait-and-see approach to commencing construction of Grand Lakes III. “There are two lots left at Grand Lakes, enough land to build 350,000 square feet,” he said. “They are smaller sites and very good for the single-user, build-to-suit type. Our plan right now is to market the remaining land for build-to-suit, and re-evaluate at the end of the year to see if we think the market can support spec space at that point, or if we will continue to market the sites for build-to-suit.” Indianapolis-headquartered Duke owns, develops, leases and manages office, industrial and health care properties. The largest publicly traded, vertically integrated office and industrial real estate company in the nation, Duke’s portfolio of owned, managed or in-progress properties encompasses over 144 million square feet in 24 major cities across the country. Additionally, Duke controls more than 7,100 acres of land that can accommodate in excess of 107 million square feet of development.