VOL. 126 | NO. 231 | Monday, November 28, 2011
EMPHASIS Office & Industrial Real Estate
Depot Biz Park Changes Direction
By DAVID ROYER
From Army supply base to base of operations, the new owners of the Memphis Depot Business Park hope to position their revitalized 260-acre site in South Memphis on real estate brokers’ radar screen as a solution for industrial needs.
The new owners of the Memphis Depot Business Park are looking to a brighter future for the property near the airport.
(Photo: Lance Murphey)
“We just think it’s a really unique opportunity to take a project that’s been successful to date and continue that vision of what it can be and, if possible, take it to a new level,” said John Jenkins, partner with Dallas-based Mayfield Properties.
An affiliate of Mayfield Properties purchased the industrial park from the joint city-county Depot Redevelopment Corp. in August for $35.8 million. The property comprises most of the developed portion of the 642-acre former Defense Depot Memphis off Airways Boulevard.
Now under private rather than public ownership, the revamped site can be actively marketed with commercial real estate brokers who might have overlooked it in the past.
“We have been pleasantly surprised at the activity we’ve seen to date,” said Brad Kornegay, president of Colliers Management Services, which provides leasing and management from an onsite office. “We haven’t even kicked in full gear yet.”
Occupancy in the Memphis Depot Business Park was about 84 percent at the time of the sale and now is up to 85 percent after two existing tenants expanded operations.
New directional signs and maps at the guard shack soon will help trucks maneuver more easily through the site, Kornegay said. Landscaping and fire sprinkler contracts are being consolidated to control costs and provide a consistent landscape theme.
Mayfield Properties is able to fund physical improvements for tenants, who had been required to pay for their own improvements, and the company is willing to subdivide spaces if necessary, something the Depot Redevelopment Corp. wasn’t able to do, Kornegay said.
Jenkins said his group is looking for ways to reach out to nearby schools and neighborhoods, which declined as the area’s industrial base moved away.
The old Defense Depot Memphis was activated by the U.S. Army Corps of Engineers in 1942 and supplied logistical support to the army and later other military branches until it was closed in 1997. Shelby County and the city of Memphis partnered with the Depot Redevelopment Corp. to redevelop the site for distribution, service industries and light manufacturing.
Kornegay praised the improvements initiated by the Depot Redevelopment Corp., which spent $25 million on capital improvements to redevelop the old depot into an industrial park, replacing 26 roofs, cleaning or clearing run-down buildings and landscaping the grounds.
He said his initial impression of the site when he toured it with city officials in 1998 was of dilapidated buildings and overgrown facilities. Now, he was blown away when he took another look at the property earlier this year.
The revamped Memphis Depot Business Park offers 4.2 million square feet of adaptable space with clearances of 14 to 25 feet, sitting a short drive from the airport and Interstate 240, with parking for trailers and federal trade zone capabilities.
A police precinct sits at the entrance to the park, and the added security of a fence and a guard shack was a “game changer,” Kornegay said.
Wyatt Aiken, executive vice president with Cushman & Wakefield/Commercial Advisors, said commercial clients often are hesitant to locate inside the I-240 loop because of a perception of increased crime, preferring locations south or east of the airport. But the added security of a fence and guard, plus professional management at the site, could go a long way toward easing those concerns, he said.
“There’s a little of that misperception to be dealt with, and the secure nature of the park helps to overcome those issues,” Aiken said.
Despite a depressed economy, commercial brokers are seeing a small uptick in activity recently, Aiken said, and the increased visibility afforded by private ownership could help bring the Depot Business Park – which had been “quietly marketed” under public ownership – to the attention of brokers and boost occupancy.
“The depot is not for everybody,” Kornegay said, “but I think once people start understanding what is there and the amenities it has and the opportunity it has, it’ll work for a lot of groups.”