(Read more on the industrial market.)
SAN ANTONIO-Following two years of negotiations, Cross & Co. and ProLogis have traded assets in three submarkets north of the Downtown. In the end, 667,000 sf of industrial space and 55 acres have been swapped.
Locally based Cross has acquired four buildings, totaling 204,000 sf, in the San Antonio Distribution Center at 3453 Interstate 35 North and four buildings, totaling 193,000 sf, in the I-35 Business Center at 12000-200 Crownpoint.
On the flip side, Cross turned over two bulk distribution buildings, totaling 271,000 sf in the Tri-County Industrial Park in Schertz, TX to ProLogis. A 139,000-sf building at 976 Associate Dr. is a multi-tenant asset and the other, 132,000 sf at 6413 Tri-County Pkwy. is leased to Valero Energy Corp.
ProLogis also claimed 55 acres in Tri-County Industrial Park as part of the deal. The Denver-based company plans to build one million sf. Construction will begin in first quarter 2008 on the first phase, two distribution facilities totaling 255,000 sf.
Ryan Smith, a Cross & Co. partner, says ProLogis' interest was in the land, but Cross & Co. was more interested in trading assets. "The end result was that they let go of small-tenant assets and we sold them two buildings with a couple of tenants and 55 acres of land," says Smith, who negotiated the deal with Cross & Co. partner David Adelman.
Smith tells GlobeSt.com that the assets' upside focuses on rent increases. The roll is 20% annually. "The small industrial spaces are difficult to create in today's construction environment," Smith says. "Therefore we think there's an opportunity to increase rent in these smaller suites, relative to construction costs."
Cross's portfolio was developed in the mid-1980s and is 95% leased. ProLogis' new holdings are close to 80% occupied and were built within the past four years. Similar assets in the market are selling for $40 per sf to $45 per sf.
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