Distributors fuel trade park growth

On the heels of signing a big lease and soaring interest in North Mississippi from distributors, Hillwood Investment Properties is launching two speculative buildings in DeSoto Trade Center.

The buildings will add 853,000 square feet to the park, on the west side of Interstate 55 between Church Road and Star Landing Road in Southaven.

Construction on the 552,000-square-foot DeSoto Trade Center III and the 301,000-square-foot DeSoto Trade Center IV should begin in 2006.

“That means they’re very bullish on the North Mississippi market,” said Al Andrews, Memphis partner in Panattoni Development Co., which has also been busy in North Mississippi.

Panattoni has a 754,000-square-foot spec building and a site that can handle another 389,000 square feet in its Southaven Distribution Center at the northeast corner of Airways and State Line Road.

The announcement of the new spec buildings comes shortly after Hillwood signed a deal with Kuehne & Nagel Inc., a logistics and supply chain company with 620 offices in 98 countries. Kuehne & Nagel recently completed an 866,000-square-foot build-to-suit lease agreement with Hillwood.

“This is an ideal location for Kuehne & Nagel because of the ‘campus feel’ and quality of the business park, and the convenience to the transportation hubs in Memphis,” said John Frick, executive vice president of Kuehne & Nagel. “Being in a foreign trade zone also will allow us to market that advantage to our customers.”

Foreign trade zones are designated, secured areas within the United States that are considered outside the customs territory of the United States. Products imported directly into FTZs can be further produced, added to other products or stored without ever encountering customs. This reduces duties and taxes and eliminates disruption in the supply chain.

Kuehne & Nagel will employ 200 in its new facility, a distribution center for various customers to all regions of the country. The company expects to be operational by June 2006.

Jim Flanagan, president and CEO of the DeSoto County Economic Development Council, said the Kuehne & Nagel deal, along with the announcement of the new spec buildings and continued interest from national developers, is a vote of confidence in North Mississippi.

“It’s a clear sign of the positive working relationship that developers and industries experience here in DeSoto County thanks to the elected officials and the state of Mississippi and their willingness to offer incentives,” said Flanagan. ” I don’t see any signs of the activity slowing down.”

The Memphis industrial real estate market, which includes North Mississippi, has been on fire this year.

About 3.2 million square feet were delivered in the DeSoto submarket through the third quarter, according to CoStar, an independent real estate consulting firm. Almost 2 million square feet were delivered in Memphis through the third quarter.

Dan Wilkinson of Colliers Wilkinson Snowden and Richard Burnette of The Burnette Co. represented Hillwood. Bob Hutson, Patrick Burke and Matthew Ware with CB Richard Ellis represented Kuehne & Nagel.

Hillwood, the Dallas-based commercial real estate developer, also is currently building a 1.2 million-square-foot facility for Helen of Troy.

Hillwood already has completed two buildings within the park that total just over 1.2 million square feet together.

The 668-acre DeSoto county park has the capacity for 16 buildings totaling more than 11 million square feet.