COPPELL, TX-With plans to consolidate and expand its local distribution operations, SP Richards Co. has leased 212,776 square feet in Duke Realty Corp.’s Freeport VII building. The office supplies and furniture distributor signed a long-term lease for the space at 631 South Royal Lane.
Currently, SP Richards occupies 130,324 square feet in two distribution facilities in Carrollton. The company leases 55,600 square feet in Duke’s Frankford Distribution Center II and also owns a 74,700-square-foot facility nearby.
The Freeport VII building will replace those two facilities and will also allow for an 82,450-square-foot expansion, according to Jeff Thornton, senior vice president of Duke Realty’s Dallas operations. “The Frankford lease was expiring, and consolidation is something SR Richards has been contemplating for a couple of years now,” he says, adding that the firm has been “busting at the seams.” “They felt the timing was right to make a move.”
Thornton tells GlobeSt.com that SP Richards wanted to stay in the submarkets north of DFW Airport and identified 23 possible buildings that would accommodate its needs. The company short-listed three buildings, one of which was Duke’s Freeport VII, a 383,925-square foot warehouse/distribution located off I-635 and Freeport Parkway.
Freeport VII had been empty since Exel Logistics lost a contract and vacated the space. It is one of several buildings that Duke owns in the submarket; the company owns 4 million square feet in the Freeport North industrial park.
“We definitely had the space for SP Richards, and we’ve had a good relationship with them, but it was clearly a risk because we were competing with the market for the deal,” Thornton explains, pointing out that the occupancy rate in the North DFW airport submarket was 18.1% at the end of the third quarter, according to CoStar. “We have the space and the location, but so do a lot of our competitors. We had to work to make the deal.”
Thornton says Duke won the deal because the eight-year-old Freeport VII checked all the boxes on SP Richard’s list. “We had a relatively new, second generation building that already had a lot of finish out – the warehouse was already air conditioned and it had 10,000 square feet of office space,” he notes.
Randy Wood, Duke Realty’s vice president of industrial leasing in Dallas, negotiated the deal. SP Richards will move into its new space on April 1, 2011. With the new lease, Freeport VII is 55.4% occupied, leaving 171,149 square feet available for lease.
“Over the years, the North DFW Airport submarket has been an outstanding submarket in terms of absorption and occupancy, but during the last development cycle, there was a lot of new development,” Thornton says. “The increased vacancy is more of a function of overbuilding – it’s the oversupply that is causing the heartache right now.”
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