News Article | 4/8/2009

Service Focus Helps Hillwood Lease Up Alliance

FORT WORTH, TX-A top executive from Hillwood Properties attributes the company’s recent success securing two new industrial leases at its Alliance Global Logistics Hub to a comprehensive program of services that go far beyond what most landlords offer their tenants. The new leases, completed in late March, total more than 650,000 square feet.

“If we were simply a real estate developer that was focused just on the box, the building, I don’t think that would get us far in the current economic climate,” Hillwood senior vice president Bill Burton tells “There are a lot of good developer and good buildings out there right now. But we spend almost as much time working on issues like labor, productivity and efficiency at moving products as we do on development. That really makes the difference in getting tenants to sign.”

According to Burton, the Fort Worth-based developer has signed one million square foot of leases at Alliance since January. Several were renewals or expansion by existing tenants, but Alliance Brokers Inc. signed a new lease for 292,500 square feet of logistics space in Alliance Westport 20 and Q-Edge signed for 365,440 square feet of manufacturing and distribution space in Alliance Gateway 2. Alliance Brokers, an affiliate of Dallas-based Trans-Trade Inc., is a logistics company specializing in transporting heavy-load containers. Q-Edge, a subsidiary of Taiwan’s FoxConn Electronics, is an electronics assembler and distributor.

Burton lists at least a half dozen services and amenities provided at the 17,000-acre development, which has 29 million square feet spread among 50 buildings. The most obvious is the presence of a BNSF Intermodal facility capable of handling 600,000 containers and trailers per year. The exec says the facility saves logistics and distribution tenants a significant amount of money by reducing the cost of transporting goods between trains and the distribution buildings.

In addition, the facility is served by a private road capable of carrying heavy-weight container truckloads that public roads cannot accommodate. “A lot of product today goes out in containers that are only a third to half full. They hit the weight limit for public streets if they carry more than that. It’s much more efficient and cost effective when you can handle full containers,” Burton explains.

Other services and amenities at Alliance include Foreign Trade Zone status; a centralized examination station, which is a high-security, bonded location for US Customs officers to inspect selected import and export shipments; and the Alliance Opportunity Center, an employment training and job application service run by two state agencies and Tarrant County Community College. “We’ve had 100,000 applicants come through the Opportunity Center since it opened,” says Burton. “It’s a great resource for employers. Job applicants are pre-screened, relieving tenants of sorting through resumes and conducting initial interviews. It saves a lot of time and money.”

Despite the recent successes, the Hillwood vice president acknowledges Alliance’s occupancy level has fallen from close to 99% a year and a half ago to about 90% today. He blames the drop on last year’s completion of some 1.8 million square feet of new space and the buy-back of a vacant build-to-suit Nokia manufacturing facility. The space Q-Edge leased is in the former Nokia building. Burton calls the company’s aggressive expansion program a prime example of unfortunate timing.

“When we started those projects, we were doing 14 to 16 million square feet of leasing a year,” he reports. “Preleasing for new spec product was average 45% to 50%. There was still absorption last year, but closer to a couple million square feet. Spec buildings were coming in with 18% to 20% preleasing.” But with new development halted and the pipeline of completed projects rapidly drying up, he expects occupancy will start to climb again. “We’re cautiously optimistic we’re going to burn through some of this vacancy. There are three or four very large deals in the market right now, and we hope to get at least one of them,” he says.

Burton points to additional features of Alliance that he says helps the development weather the current economic storm: diversification and flexibility. “We haven’t focused on just one type of customer or industry,” he says. “We have manufacturing, light manufacturing, distribution and office space. Our tenants deal in consumer products, pharmaceuticals, electronics, automobiles and logistics. And once they’re here, we offer them room to expand – or contract. That’s one area we really focus on. We’re going to be here and work with them when things are going well and when they’re not. It’s not just services but an attitude of service that makes us different.”