Outside Interests Local Sector’s Biggest Benefactors

By Eric Smith

As the real estate slump toils on, a Chicago-based company has proven to be a savior of sorts for the local industrial sector.

HSA Commercial Real Estate, already a player in the local market, continued its investments here by pulling the trigger on three of the four most lucrative deals in Shelby County during the past year, all of them in the Oakhaven/Parkway Village area.

The company in August spent $9.1 million for a 361,398-square-foot warehouse at 5321 Shelby Drive; in November it spent $8.4 million for a 342,860-square-foot warehouse at 4219 Air Trans Road; and earlier this year it spent $3.7 million for a single-tenant, 100,000-square-foot facility at 4750 Pleasant Hill Road.

Those transactions ranked first, second and fourth, respectively, among industrial sales in Shelby County from May 1, 2008-April 30, 2009.

That means HSA now has notched five high-dollar deals in Memphis, spending close to $75 million on a local portfolio that encompasses about 2.6 million square feet. Other properties include the Chickasaw Distribution Center at 5100 S. Hickory Hill Road and the Willow Lake Business Park and Corporate Park.

Frank Quinn, senior vice president at CB Richard Ellis, worked on the team that sold the Pleasant View building to HSA Commercial. He said the company’s Memphis acquisitions, including the most recent one, highlight the quality of industrial assets a savvy investor can find here.

“In HSA’s case, they came in here and bought quality tenancy and it fit in their previous strategies,” Quinn said. “I think it was a great deal.”

Eric Ogden, senior vice president of acquisitions for HSA Commercial, wasn’t available for this article, but he has told The Daily News that the company developed a keen interest in assets here once it established a foothold in Memphis in early 2007.

SHRINKING: A handful of industrial sales kept that sector afloat during the past year, but the slumping economy meant fewer transactions on the investment and leasing sides of the business. The deals that did get done were smaller in value and size. -- PHOTO BY ERIC SMITH

“(Memphis) plays bigger than its size,” Ogden told The Daily News for an article last year. “Because you’ve got FedEx, because you’ve got UPS, because you’ve got a significant number of railheads there, it plays like a much bigger distribution hub than the (square footage) would indicate.”

HSA Commercial isn’t the only out-of-town company to show an interest in Memphis real estate and then back it up with capital investment.

Andy Cates, vice president of brokerage services for Colliers Wilkinson Snowden, noted the recent sale of the 120,560-square-foot warehouse at 4000 Air Park Cove in Oakhaven/Parkway Village. The buyer, Hubcap LP, a local affiliate of San Jose, Calif.-based Quality Real Estate Management LLC, paid $2.6 million for the facility.

Cates, who represented Hubcap in the deal, said for the buyer to acquire a property like that at $22 per square foot was a wise investment, especially compared with what the company would have seen elsewhere in the country.

“They’re seeing prices $50, $60 a foot for the same building in other locations,” Cates said. “They got a great deal, and they got a great deal in comparison to what California was. I think people are always going to look over here and say, ‘Wow, I can pay $2.6 million for a 120,000-square-foot warehouse that works perfectly for my needs. Why didn’t I come here sooner? Why am I paying more money to do my whole distribution out of California?’”