Hillwood Properties bets on industrial recovery
Bill Bowen and Robert Francis
Hillwood Properties, the Perot company that is developing the 17,000-acre master-planned commercial and industrial property around Fort Worth Alliance Airport, will soon begin work on a new industrial phase of the development with construction of 1.2 million square feet of speculative industrial/warehouse space beginning this summer, the company announced on March 26.
This new phase of AllianceTexas, an industrial park named Alliance Center North, will include 650 acres and accommodate 9 million square feet of warehouse and industrial space along the west side of Interstate 35W north of Eagle Parkway.
Construction on the first building, Alliance Center North 1, is set to begin this summer. The 1.2 million-square-foot facility, now being designed by GDA Architects, will be used to offer ready space to potential clients, Hillwood executives said. The space should be completed by first quarter 2014.
“Recently, Hillwood has seen a major rebound in the industrial market, and we’re at a point where demand is beginning to exceed the available space that we have on the ground,” said Mike Berry, president of Hillwood Properties.
The plan is a return to action and expansion for the developer, which last year signed leases for 5 million square feet of industrial space to new or existing clients.
“We have not built any new spec industrial since 2008, pre-recession basically,” Berry said. “It’s exciting for us to get into forward motion in our core area.”
Hillwood has built and filled 32 million square feet of commercial, industrial, office and retail space for more than 300 corporate clients among its massive industrial parks in far North Fort Worth. The industrial parts of the development are in three basic areas: Alliance Gateway, on the east side of I-35W along Texas 170; Alliance Center, surrounding Alliance Airport; and Westport at Alliance, an industrial park on the west side of Alliance Airport with direct access to the BNSF Intermodal Facility.
Alliance Center North will have space for as many as a dozen or more buildings along a 1.5-mile stretch of I-35W and is near the BNSF Intermodal Facility and Alliance Airport.
North Texas is a distribution center and the nation’s fifth-largest market for industrial and warehouse space. Vacancies here ran above 10 percent in late 2011 and early 2012, but have been moving to 9 percent or lower, according to the CoStar Industrial Report 2012.
Deliveries of and absorption of industrial space in 2010 was the lowest in more than 30 years, but is slowly starting to recover. Users absorbed 177 million square feet of U.S. industrial and warehouse space in 2012, up 15 percent from 2011, according to the CoStar report.
The inching recovery prompted Hillwood to pull the trigger on new space, Berry said. And the company has the acreage to do it.
“Alliance Center North is a part of our property that we’ve held on to for a while,” Berry said. “ It’s one of the last big untouched flat blocks of dirt where we have a lot of flexibility to build a big building and the ability to accommodate a variety of customers.”
Berry said that the new building is a validation that the North Texas market for industrial space is starting to tighten.
“In 2011, we did 3 million square feet of [industrial] leasing, inside the existing portfolio. In 2012, we did 5 million square feet of total leases, with 40 percent of that new growth to the area – the Amazon deal for instance.
“If you home into that big-box niche, 800,000 to 1.2 million square feet, there are less than a handful of options in the market. So there are more deals in that size category that we feel like if we go out and max that project out we’ll be in a position to win the business that comes along in the next round of deals.
“Our philosophy always was to have 1 million square feet on the ground or under construction to get back into our old operating mode, he said.”
Alliance remains only 40 percent developed.