A Texas developer of the 27,000-acre master-planned, mixed-use AllianceTexas development has begun construction on two speculative buildings totaling nearly half-a-million square feet of industrial space.
This will add to its portfolio after landing a massive industrial lease.
Hillwood, an investment and development firm founded by Ross Perot Jr., has begun work on Alliance Center East 2 and Alliance Center East 3 along Interstate 35W in Fort Worth, Texas, with each building designed to total 224,616 square feet of industrial space. The two speculative buildings add leasing bandwidth to Hillwood’s portfolio, which has been built on constructing space ahead of tenant demand to bring an on-demand element to its leasing efforts.
Dallas-Fort Worth still holds the heavyweight title for being home to the largest industrial pipeline, with 63.6 million square feet of industrial space under construction. Phoenix ranks No. 2 with 50.5 million square feet of industrial space under construction. Even though the velocity of new industrial projects getting underway in Dallas-Fort Worth is slowing, one executive says there’s still market demand for smaller hubs.
“Even as we are seeing demand moderate closer to pre-pandemic levels, overall, demand, particularly in AllianceTexas, is very strong, which is why we are continuing to invest in uncertain times; we are taking a long-term view,” Reid Goetz, senior vice president of Hillwood, told CoStar News.
Goetz said he’s seeing continued market demand for spaces up to 225,000 square feet from manufacturers, third-party logistics providers and e-commerce companies. The two Class A industrial buildings are designed to meet this demand along Interstate 35W, which runs through Texas from the Mexico border into Oklahoma, and near the Perot Field Fort Worth Alliance Airport. “These buildings will give our customers access to one of the most critical freight corridors in the country,” he added.
The two buildings are expected to cater to would-be tenants ranging from 84,000 square feet to 224,616 square feet of space, with the ability to split the buildings for multiple tenants.
Each building is designed with 32-foot clear heights, 60-foot loading bays and one 185-foot truck court with additional land tied to Alliance Center East 3 earmarked for additional parking requirements. Construction is scheduled to be completed in early 2024.
Adding the two buildings to Hillwood’s portfolio builds upon its AllianceTexas strategy, which includes continually having available, ready-to-occupy Class A speculative industrial options for its new and existing tenants. Hillwood has utilized this strategy during its 35 years of developing AllianceTexas.
Changing Demand
The buildings are being built adjacent to a more than 1.2 million-square-foot distribution hub — once the firm’s largest speculative project that was later leased to retailer Target. The buildings are being constructed on some of the last tracts located along the Interstate 35W frontage road in AllianceTexas, Goetz said.
“Over the past two years or so, we have really focused on that larger bulk product, with that distribution center leased to Target last year being the largest ever launched as a speculative project,” Goetz told CoStar News. “We just leased a 1million-square-foot facility to Southwire, and we have leased a couple 400,000-square-foot facilities.
“We still believe in bulk demand, but we see it moderating out there, and we see a significant amount of demand for 225,000 square feet or 80,000 square feet as Dallas-Fort Worth continues to add hundreds of new residents a day,” he added.
Goetz and his team speak with the more than 500 tenants at AllianceTexas to keep up with what they want to lease in the future. He also talks to new would-be tenants seeking space in Dallas-Fort Worth, the nation’s fourth-largest metropolitan area with more than 7.9 million residents. He said the single-most-important amenity in an industrial facility is access to power.
In the case of AllianceTexas, Goetz said the same power grid that fuels Meta’s massive data center campus in Fort Worth, Texas, also provides power to these development tracts. Access to power gives would-be tenants the ability to automate their operations, he said. Walgreens, which has been automating its pharmacy fulfillment centers, is an example of businesses benefiting from a highly redundant electrical grid — like the one at AllianceTexas, he added.
For the Record
RGA Architects designed the buildings. Inwood Bank financed the project with an undisclosed sum. Peloton Land Solutions provided civil engineering design for the buildings. Hillwood Construction Services is the project’s general contractor.