Fort Capital Finds Value in Industrial Within High-Growth DFW Submarkets
Due to the lack of new class-B supply paired with a high demand, Fort Capital believes well-located flex products such as the three it recently acquired will be increasingly attractive and cost-effective alternatives.
DALLAS—Texas-based real estate investment firm Fort Capital has expanded its industrial property portfolio with the acquisition of three class-B industrial/flex properties: Commerce Business Park and 4040 W. Royal Lane in Irving, and Avion Business Center in Carrollton. The properties total nearly 350,000 square feet.
“These assets offered Fort Capital the opportunity to acquire investments in two high-growth highly active submarkets of DFW,” said Hunter Harrison, vice president of investments with Fort Capital. “Due to the lack of new supply in these areas paired with a high demand, we believe well-located flex products like Commerce Business Park, 4040 W. Royal Lane and Avion Business Center will be an increasingly attractive and cost-effective alternative.”
Commerce Business Park includes 33 flex office buildings totaling 179,049 square feet on a combined 18.64 acres. 4040 W. Royal Lane offers 92,051 rentable square feet across seven flex office suites. Both properties are less than one mile northeast of DFW International Airport in the DFW Airport submarket.
These flex office spaces are part of an institutional-quality asset in a strong infill market with high barriers to entry. Given the location in the heart of the metro with access to key infrastructure, the assets are positioned to deliver strong performance in the near term with substantial long-term upside, GlobeSt.com learns.
Avion Business Center, located north of Belt Line Road between Interstate 35 and Dallas North Tollway, consists of three flex buildings totaling 77,339 square feet. This area within the Northwest Dallas submarket provides access to major population centers within the DFW metro. The 16 total suites provide valuable diversity in the ratio of warehouse to office space with key features including the number and type of loading doors.
“We feel there is a lack of supply with regards to well-located class-B industrial properties,” Harrison tells GlobeSt.com. “These assets we’ve acquired are in irreplaceable locations and with construction costs as high as they are, the replacement costs of these assets make them uneconomical to rebuild.”
Net absorption in fourth quarter 2019 had large gains from the previous quarter, with more than 1.48 million square feet of space taken up, yielding 3.49 million square feet total for 2019. This is the third-highest year of net demand for the decade, according to a report by CBRE.
Vacancy dropped only slightly in fourth quarter 2019 despite the large positive absorption figure. This is largely due to 1.9 million square feet of competitive inventory introduced to the DFW market and tenant appetite for efficient high-quality space, says the report.