Without revealing the actual lease rate, Trammell Crow SVP Dave Ellis, who handled the lease negotiations, acknowledged aggressive pricing, saying it was possible because of the efficiency of a large building and an aggressive contracting climate. "That's what we are taking advantage of," he tells GlobeSt.com. Cushman & Wakefield brokers Gary Randles (Portland) and Ray Stache (Atlanta) represented Fort James Corp. in the transactions.

If there's a downside to the transaction, it's that it could result in 300,000 sf of negative absorption, as G-P will be moving out of 500,000 sf and into 400,000 sf of a new 600,000-sf building. That plus the speculative 488,000 sf TCC delivered in the fourth quarter has helped push warehouse/distribution and manufacturing vacancy up to the 10% range.

As Grubb & Ellis stated in its fourth quarter report, however, it's a trend we may have to get used to as big industrial users look for ways to make themselves more efficient by consolidating their operations into new modern structures built to suit their changing wants and needs, such as higher clear heights.

"While lack of demand is an undeniable challenge, the reality is that market vacancies, particularly in the long run, may appear higher than they actually are as a function of product inefficiency rather than oversupply," states the report. "It is this phenomenon that remains and will continue to remain a problem for the industrial market. Such building owners may eventually have to bite the bullet and get creative when dealing with this issue, possibly through redevelopment or partial demolition."

Fort James Corp., acquired by Georgia-Pacific in 2000, is an international consumer products company that manufactures bathroom and facial tissue, paper towels, napkins, cotton pads, cups, plates, cutlery and food wrap products. The company's North American brands include Quilted Northern, Soft ´N Gentle, Brawny, Mardi Gras, So-Dri, Vanity Fair and Dixie.