J. Holmes Davis IV, senior vice president for Philadelphia-based Binswanger Corp., tells GlobeSt.com that an 82,574-sf lease by Packaging Corp. of America gets some, but not all, of the credit for investor interest in the distribution center at 1600 E. Plano Pkwy. The empty box, sitting on 26 acres along the President George Bush Toll Road, has been on the market for $19.5 million. A neighboring 10-acre tract is up for grabs too--at an extra cost.
The distribution center abuts the Lake Forest, IL-based Packaging Corp. of America's manufacturing plant. Stuart Smith, senior vice president in Dallas for Chicago-based UGL Equis Corp., says the leased space will be used as overflow storage for the corrugated box maker. He says the search began about six months ago for warehouse space closer to its factory at 1800 E. Plano Pkwy. than the 76,000 sf that it now leases at 808 Stewart Ave. The sweet spot is the new space, leased for five years, is right next door, he adds.
"There is hardly any warehouse space in Plano. Most of what's available is higher finish-type space," Smith says, faulting a zoning regulation with creating the submarket void. "True warehouse space is a relatively rare commodity because of the zoning issue."
The distribution center boasts a 32-foot clear height, 13,200 sf of office space, 156 dock doors and dual-feed power lines. The box was built in 1983 and expanded in 1986.
Davis says Chicago-based Klaff Realty LP wanted to sell or lease the building, but didn't plan on it swinging to multi-tenant use, particularly for one under 200,000 sf. "The charge was to sell it, not lease it," he says.
It was under contract by an investor when the tenant surfaced--a talking point that only heightened interest in the property. The sales contract fell out in January, but a different investor is trying to work out a deal, Davis confides.
The lease's drawing power has carried some weight. "They like the fact that there's going to be a tenant in there," Davis says. "But, what's driving the investor interest more than anything is this building represents the only one I know of over 300,000 sf that's fully air conditioned." He estimates to add air conditioning to a comparably-sized structure would cost at least $6 per sf. "That's why investors and developers are coming at us," he says, adding rising construction costs are fueling interest as well.
With one tenant in hand, Davis says the door is open to a few more. Since there is no signed purchase contract, he says "if we can get more, our price of $19.5 million goes up."
Staying true to his profession, Davis doesn't want to jinx the new round of purchase talks so he's not saying how far along they are. "All I can tell you is we've got a buyer at the table that's negotiating," he says.
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