The hope is the tenants will stay when it's time to renew. More importantly, a project that delivered in April will be generating some cash flow, says David Pearson, marketing associate for the Holt Cos., the leasing agent for developer, Myers & Crow Co. Ltd., and owner, TA Associates.
"I wouldn't say it's desperate," Pearson tells GlobeSt.com about the strategy to fill space at Miller Road Business Center, "but I'd say it's realistic. We need to get occupancy this year. ... We're taking a look at any deals." He confides the break-even point is 50% occupancy, doable by year's end. And, he insists the bargain-basement price tags will stay in place as a lease-up strategy through 2004.
Pearson started floating the leasing plan to the brokerage community about 40 days ago. He says it's not unrealistic to talk about $3 per sf for 24- to 36-month terms on a 30,000-sf minimum and key turning with 2,000 sf of office finish-out. The developer's website shows the quoted rate had been $3.85 per to $5.85 per sf net and finish-out allowances of $4 per sf to $8 per sf.
Pearson says the new strategy is "to build value" for a warehouse/distribution development to wait out the economy and effectively compete in an 84.6-million-sf submarket with a large inventory of second-generation space. Grubb & Ellis Co.'s second-quarter report showed the northeast Dallas submarket was getting $3.93 per sf for warehouse/distribution space; 26,270 sf was under construction.
The Miller Road Business Center's cut-rate offer does not include renewal options. "We're just doing a short-term deal on the cheap, which is what the tenants want," Pearson says. "New doesn't necessarily mean expensive right now." He insists the leasing strategy was done solely to "meet the market" to fill new space so it wasn't sitting empty for long.
Already in the door is Pro Spa Inc., a wholesaler of sanitary spa equipment, which took 27,000 sf of a 130,000-sf building at 3650 Miller Rd. Cash McWhorter of Colliers International in Dallas brokered the short-term lease that coincided with the purchase of a 64,000-sf flex building at 2908 National Dr. in Garland. Colliers' John Aldrich and McWhorter brokered the sale from the Andrews Corp.
In early October, Kamco Inc., a distributor of hoses and pipes, will set up shop in 13,950 sf of a 103,500-sf structure at 3630 Miller Rd. Kamco signed a four-year lease in the four-building project that also has 64,500-sf and 84,000-sf designs.
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