Hillwood-Brookfield JV Buys 1.6 MSF at Memphis Distribution Center

Hillwood Investment Properties and Brookfield Asset Management teamed up to acquire five Class A industrial buildings in Southpark Distribution Center in Memphis.

A joint venture of Hillwood Investment Properties and Brookfield Asset Management has acquired a 1.6 million-square-foot portfolio consisting of five Class A industrial buildings in Southpark Distribution Center in Memphis, Hillwood announced Monday. The buildings reportedly range from 111,250 to 474,000 square feet, with suite sizes from 10,000 to 474,000 square feet.

Southpark Distribution Center, a master-planned industrial business park, was developed between 1992 and 1995 by Industrial Developments International. The Burlington Northern Santa Fe Intermodal Facility is immediately due east of the site, which is bordered by the metro area’s busiest industrial thoroughfare, US 78. The park is fully built out, with about 3.4 million square feet of institutionally owned industrial product.

FedEx is far and away the Memphis area’s largest employer, with 31,000 employees, according to a 2012 report by Principal Global Investors. Other major transportation-related employers include UPS (2,200 employees), Pinnacle Airlines Corp. (1,350) and Katt Worldwide Logistics (1,000).

The current Memphis industrial vacancy rate is 13.6 percent, according to the report, having increased  50 basis points over the last four years. Over the next five years, the vacancy rate is expected to fall 220 basis points.

Similarly, industrial rents have fallen 7.9 percent over the last four years, but are expected to rise 8.61 percent over the next five years. Finally, cap rates in 2011 averaged 7.8 percent.