Koll’s $120M Industrial Development Program Goes National

Dallas-based Koll Development Co. and Harbert Management Corp. have launched a $120 million industrial development program that will break ground on five speculative projects during 2008. “This is a joint venture in which we’re doing the legwork–looking for sites and opportunities–and Harbert is our financial partner,” Randy Touchstone (pictured), vice president of Koll and director of the industrial program, told CPN today. The terms of the joint venture are confidential. The first project will get underway in April in Houston on a 50-acre site near the Port of Houston. “The program will have a port focus, although we will do other projects if opportunities arise,” Touchstone said. “The Port of Houston has gotten very busy with the logjam at California’s ports. The Port of Houston is expanding and so are the surrounding support facilities like distribution. I think that will continue.” Phase I of the Houston project will include three buildings totaling 500,000 square feet. Completion is scheduled for December. Phase II, scheduled to break ground in 2010 will add two more buildings totaling 320,000 square feet. The value of both phases will exceed $50 million. Koll is currently evaluating sites for the other four projects in Texas, the Southwest and the Southeast.  Starting a major speculative undertaking at this point in the real estate cycle doesn’t bother Touchstone. “You’re always mindful to stay out of areas and deals that won’t be good, whether the cycle is good or bad,” he said. “Deals are harder to do with the debt challenges in the market today, but there are opportunities.” The financial structure of the Koll-Harbert industrial program is similar to a venture formed by Koll and Prudential Real Estate Investors called Intellicenter. That program began about three and a half years ago. To date, three Intellicenters have been completed. All are LEED certified tilt-up office buildings three and four stories high. Touchstone explained Koll’s strategic interest in developing through programs by noting that economies of scale become possible when one financial partner buys in for a series of projects. “From Harbert’s point of view, the programs are more efficient, too,” he added. “They have money in their funds that they are trying to place in deals. Having a developer committed to a portion of a fund makes it easier for them.”