New leases fill millions of square feet of southern Dallas County warehouse space

May 4, 2015 |

Developers who just purchased about 30 acres near Interstate 20 are eager to start construction on a new industrial park.

Ridgeline Property Group and Stockbridge Capital Group bought the site in far southern Dallas on Interstate 35E and plan to break ground next month on a speculative warehouse.

“The pace of construction activity in south Dallas has picked up significantly, and many speculative projects have enjoyed successful pre-leasing efforts,” said Ridgeline CEO Greg Thurman.

Ridgeline Property will build 453,600 square feet in its new Eagle Park 20/35 project, the latest in a series of big industrial buildings coming along Interstates 20 and 45 in southern Dallas County.

With recent leases in the area, more warehouses are going to be needed.

During the last few months, major businesses have leased millions of square feet of warehouse space along I-20 in southern Dallas County.

All of these big warehouse deals landed in speculative buildings — projects started by developers who didn’t have a tenant lined up first.

At the start of the year, the large volume of speculative industrial construction in the I-20 corridor looked like a gamble. But now, not so much.

“Those guys are looking real smart right now on I-20,” said Tom Pearson, executive vice president of commercial real estate firm Colliers International. “It’s a testimony to the fact that that corridor is where the developers perceived the demand to be.”

Feeling confident

Of course, developers had reason to feel confident about the southern Dallas County warehouse market.

During the last couple of years a string of big companies including Quaker Foods, BMW, Procter & Gamble, Ace Hardware, Ulta, Georgia Pacific and L’Oreal located major distribution centers along I-20 and I-45.

This year’s deals continue the trend:

Chicago-based publishing, logistics and information firm R.R. Donnelley & Sons rented the new 823,379-square-foot TCC-Penn Distribution Center on Penn Farm Road at I-20. Trammell Crow Co. and Prudential Real Estate Investors developed the building.

Amazon is taking 500,000 square feet in Crow’s new J.J. Lemmon Distribution Center at I-20 and J.J. Lemmon Road.

Logistics firm NFI rented 650,000 square feet of warehouse space on Danieldale Road south of I-20 in ProLogis’ Park 20/35 industrial park in Lancaster.

And those are just the largest transactions.

“It’s incredible when you look at the activity southern Dallas has seen in the last six months,” said Nathan Orbin, senior vice president of commercial real estate firm JLL. “You are looking at about 5.5 million square feet of deals that have either just been signed or in buildings that have just been completed.”

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Demand is there

JLL is marketing Ridgeline Property’s new project on I-35E.

“We feel like there is demand for the building,” Orbin said. “We can do a single 450,000-square-foot deal or cut the building up.

“The leasing has really outpaced the market,” he said. “We’re tracking 23 million square feet of tenants in the market — tenants that are over 200,000 square feet.”

After grinding to a halt during the recession, D-FW’s industrial building market has come roaring back in the last couple of years.

More than 12 million square feet of warehouse space was under construction in the area at the end of the first quarter.

Expanding and relocating tenants rented a net 6 million square feet of warehouse and distribution space in North Texas in the first three months of 2015.

That was far above the second-best net leasing market, California’s Inland Empire, with 3.3 million square feet. Atlanta was third, with 3.1 million square feet.

Plenty of land

Southern Dallas County has plenty of land for more warehouse and distribution projects.

The largest development site, 3,000 acres between I-45 and I-35E, is being marketed by Prime 45 Development.

“This is the last big spot Dallas County has for these projects,” said developer Mike Rader, who’s marketing the property both to industrial builders and large companies looking for distribution locations.

Rader’s Prime Pointe property in Wilmer and Hutchins is just west of the huge Union Pacific Railway Dallas Intermodal Terminal, one of the largest freight shipping centers in the country.

“With just what’s being talked about, another 1,000 jobs will be located down here,” Rader said. “I think we are going to see more deals than ever before — there is so much stuff coming to town.”

Majestic Realty Co. recently broke ground on its PointSouth Logistics & Commerce Centre near the southeast corner of Interstates 20 and 45 in Hutchins. The 1.7 million-square-foot industrial park is between FedEx Ground’s shipping hub and Union Pacific’s terminal.

“I have 250,000 square feet under construction and can do another 1.2 million,” said Majestic Realty vice president Al Sorrels. “You are going to continue to see a lot of companies go down there.

“The stigma of being south of I-20 has diminished,” Sorrels said. “And as long as the deal flow continues, things will be great.”