DALLAS-Two recent lease renewals by Illes Seasonings & Flavors and FedEx SmartPost totaling 327,750 square feet prove the Dallas-Fort Worth industrial market is strengthening. They also illustrate the fact that tenants are taking advantage of the favorable leasing environment, according to Nathan Orbin, a vice president with Jones Lang LaSalle’s local office.
Orbin represented Illes Seasonings & Flavors in a 150,000-square-foot lease renewal, along with JLL Managing Director Tom McCarthy. “Anytime we have significant renewals in addition to new transactions, that is a great sign for the overall strength of the real estate market,” he tells GlobeSt, adding that the D/FW industrial market had 2 million square feet of positive absorption in the second quarter, which was positive for the third consecutive quarter. “While renewals don’t directly affect absorption, it is a positive reinforcement of the strengthening market and more importantly it’s not adding to the vacant space that is already available.”
Illes Seasonings & Flavors is staying at 2200 Luna Rd., a 268,548-square-foot building located in the Valwood/Stemmons submarket. It has been a tenant in the class A distribution facility for 10 years. The landlord, Billingsley Company, was represented internally by vice president Carter Crow. With the renewal, Billingsley’s industrial building is 100% leased.
“Tom and I partnered with Illes for more than 18 months in search of the best space for their unique requirement,” Orbin says. “Landlords have created an aggressive, competitive environment, which has caused tenants to fully evaluate relocating along with renewing. Landlords understand that it is easier to retain than find new tenants, therefore significant concessions are being offered in order to keep the tenants they have.”
For example, FedEx Smartpost Inc. renewed its lease for 177,750 square feet of industrial space at 4121 Pinnacle Point Dr. Corbin Crews of CB Richard Ellis represented the landlord, TR Pinnacle Corp., in the transaction.
Orbin notes that the positive absorption the Metroplex has posted this year has primarily been attributed to larger tenants executing significantly sized transactions. However, in the second quarter, activity has begun to increase for the small to mid-sized tenants, which is one of the best indicators of a healthy market, he says.
“Forward-thinking tenants realize the opportunities that exist and understand this is the time to evaluate their real estate, especially if they are looking to sign a long-term lease,” Orbin says. “The timing in evaluating a company’s real estate needs has increased significantly from several years ago. Discussions and analysis are taking place much earlier than before, which can often lead to tenants renewing early and achieving reduced occupancy costs.”
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