Monday, June 23, 2008

Major Lease docks

Palmer Distribution Services Inc. signed a lease in InterPort Distribution Center last week for 468,000 square feet of space -- representing the largest lease ever executed in a speculative warehouse in the Houston area.
The Houston-based company, which operates under the name Palmer Logistics, is a third-party logistics provider that handles warehousing and trucking for customers on an outsourced basis.
The new lease represents a 61 percent increase in warehouse space for Palmer Logistics, which already occupies 1.2 million square feet of space in 12 locations around Houston. This is the first major site close to the Port of Houston for the company.
"We felt that it was really necessary to position ourselves in the Port market to capitalize on the growth in imports and exports," says Brett Mears, executive vice president of Palmer Logistics.
Phase I of InterPort Distribution Center consists of a 598,000-square-foot facility at 13001 Bay Area Blvd. The building was completed last November by developer First Industrial Realty Trust Inc. and immediately sold to USAA of San Antonio.
David Munson, senior leasing manager for First Industrial, represented USAA on the recent lease transaction. Palmer Logistics was represented by Bob Berry of The Staubach Co.
The 130,000 square feet remaining in Phase I is also on Palmer Logistics' radar screen.
"We're planning on expanding into the entire building," Mears says.
With this lease under its belt, First Industrial is ready to move forward with Phase II of InterPort Distribution Center.
The Chicago-based firm will break ground in two months on a building with nearly 733,000 square feet of warehouse space. The building will be developed on a spec basis, and sold after completion.
"The (Palmer Logistics) transaction definitely gave us the confidence to move forward on the next phase," says Troy MacMane, regional manager in Houston for First Industrial.
Setting records
Charles Turner, chief financial officer of developer PinPoint Commercial LP, says this will likely be one of the largest industrial lease transactions of 2008.
"It's a pretty big deal," Turner says. "You only get a few of those; maybe only one or two a year."
The Palmer Logistics deal is a little bit larger than another major lease signed last year by Wilson Industries Inc. for 450,000 square feet in Underwood Distribution Center I, a 900,000-square-foot industrial facility built by Clay Development & Construction Inc.
Palmer Logistics will be ready to occupy all of its newly leased space in about three months when tenant improvements are completed. A specialized location scanner system will be incorporated into the warehouse as part of the customization.
"It's going to be a brand-new facility we get to design," Mears says. "It's going to better position us relative to our competition."
BASF Corp., Palmer Logistics' largest customer, will use a sizeable portion of the building. BASF's operations will be consolidated from five other Palmer Logistics locations into InterPort Distribution Center.
"It was really an optimization project for that customer," Mears says. "It decreases the cost to the customer. That's the primary goal."
Palmer Logistics will keep the warehouse space that BASF currently uses and will work to fill it with new customers.
The firm currently has 150 employees, but expects to add 30 more when the new space is ready.
Deal details
Landlord: USAA Tenant: Palmer Distribution Services Inc.Space: 468,000 square feetSite: InterPort Distribution Center at 13001 Bay Area Blvd. For more information see: www.houstonrealtyadvisors.com or www.houstonrealtyadvisors.net or www.edayres.com