VOL. 127 | NO. 235 | Monday, December 3, 2012
SPECIAL EMPHASIS: Industrial Real Estate
Local Logistics Firms Expand Medical Real Estate Offerings
By MICHAEL WADDELL
Memphis area industrial brokers are reporting an increase in activity with third-party and proprietary logistics companies involved in distribution of medical/pharma-related product.
During the second half of this year, several local companies have inked new leases that will expand their overall space in the Memphis area, creating new jobs in the process.
“We are definitely seeing local and nationwide growth with 3PL activity and medical suppliers based on an improving economy and the very competitive nature of that industry,” said Patrick Burke, senior vice president at CB Richard Ellis Memphis, who explained CBRE is currently in top-secret talks with a couple of new companies interested in the area.
In July, proprietary medical device company Teleflex Inc. inked a 627,294-square-foot lease at Olive Branch Distribution Center in DeSoto County. Burke represented Teleflex in the transaction. The deal represents the largest lease in the area since July 2010 and greatly reduced the availability of Class A bulk inventory in the local industrial market. The Memphis market enjoyed more than 1 million square feet of positive absorption in Q2 followed by 1.6 million square feet of positive absorption in the third quarter, according to CBRE’s recent Industrial MarketView report.
“DeSoto County is also currently offering a new tax break for companies involved in the medical sector that relocate near to area hospitals,” Burke said.
The goal of the Mississippi Health Care Industry Zone Act, which was implemented in May, is to expand access to high-quality medical care for Mississippi residents and increase the number of health care jobs in the state by providing incentives to health care businesses that locate or expand within a qualified health care zone.
McKesson, Teleflex and Smith Medical are the first companies to take advantage of the new tax break.
Then in late August, Millstone Medical Outsourcing LLC inked plans to relocate its Memphis operations from a 45,000-square-foot space to a larger, 150,000-square-foot facility in IDI’s Crossroads Distribution Center, which is currently under construction in Olive Branch. The new facility will offer Millstone operational space for bone/tissue storage, mechanical inspection, loaner kit processing, and packaging services and distribution.
“Companies are looking for really clean facilities where they can get their sensitive products, both in regards to time for delivery and how they are handled, in and out with good logistics and traffic times,” said Andy Cates, executive vice president at Colliers International.
The past few months have also seen other local 3PL companies announce plans to increase their area footprints, gobbling up prime Class A industrial and office space across the Mid-South.
Coregistics is taking over the rest of its building in the Hickory Hill area, expanding its operations from 265,000 square feet to 420,000 square feet, and the company could expand further into a nearby 180,000-square-foot facility by the third quarter of next year.
The company originally entered the Memphis market in 2009 and handles packaging and logistics for customers in the pharmaceutical, electronics, automotive, apparel and beverage industries, among others.
“Memphis is the distribution heart of America,” said Eric Wilhelm, Coregistics CEO. “I am twice as bullish on the Memphis market as I am about our other three markets of Indianapolis, Atlanta and central New Jersey. Memphis is a target-rich environment for us. We can do more for more companies in Memphis that aren’t being served by what we do currently.”
The company will add approximately 100 new employees as part of the current expansion, and Wilhelm expects to add as many as 150 additional employees with the growth next year.
“Since the rebranding, we have completely beefed up our management and middle management teams,” said Wilhelm. “Memphis is one of our key velocity centers during peak shipment times. We expect that by the middle of 2013 we will have peak days of between 60 and 85 truckloads, with the busiest days possibly hitting 100 truckloads.”
Further company growth plans could lead to the need for as much as 1 million square feet within the next three years.
Coregistics, which was formerly known as Market Resource Packaging, rebranded in June after being acquired by IAM Acquisition in March.
Bioventus announced plans last week to grow its overall Memphis operations from 30,000 square feet to nearly 70,000 square feet, creating 44 jobs in Shelby County. The Durham, N.C.-based biologics company, which will invest $5 million in the expansion project, will lease nearly 40,000 square feet of new office and manufacturing space off Goodlett Farms Parkway at 1900 Charles Bryan Road in Cordova.
And New Breed Logistics, specializing in outsourced logistics and supply chain consulting, signed a new 404,000-square-foot lease in September at Southpark Distribution Center.