The TJX Cos. Inc. has inked a substantial deal in Southeast Memphis, representing the largest industrial lease so far in 2013.
The Framingham, Mass.-based retailer has signed a lease for 414,076 square feet at Chickasaw Distribution Center Building D, 6100 E. Holmes Road, suite 101. The Class A warehouse and distribution center will support retail sales of apparel and home furnishings.
The TJX Cos. owns and/or operates under brand names such as T.J. Maxx, Marshalls and HomeGoods. TJX had a sales volume of $25.9 billion in 2012.
In the Memphis metro area, TJX operates five T.J. Maxx stores, two HomeGoods and five Marshalls. TJX has no current presence in Memphis and Shelby County other than its retail stores.
Michael Reid, senior vice president with Philadelphia-based Binswanger Management Corp., represented TJX in lease negotiations. Tim Moore, vice president of leasing in Memphis’ Industrial Developments International Inc. office, represents the landlord, San Antonio, Texas-based USAA Real Estate Co.
TJX’s lease comes at a time when the local industrial market appears to be showing signs of life – especially in the absorption of Class A space. Memphis-based Patterson Warehouses Inc. just leased 237,952 square feet in Marathon Distribution Center, 295 Marathon Way in Southaven.
“We’ve just been ecstatic about the overall deal activity that we’ve seen in the Memphis market,” said Lang Allen, executive director of industrial portfolio management for USAA. “People looking for good quality Class A real estate, the availability is pretty thin.”
TJX recently submitted a payment-in-lieu-of-taxes (PILOT) application with the city-county Economic Development Growth Engine, per its legal counsel, Lodie Biggs of Baker, Donelson, Bearman, Caldwell & Berkowitz PC. The initial PILOT application states that TJX considered numerous alternative sites for this project in both Tennessee and Mississippi, but the 6100 Holmes location is the preferred site if the retailer is able to lower the overall operating costs through local incentives.
TJX’s new capital expenditures of real property and personal property are $1.05 million and $5.93 million, respectively. Projected employment of the new Southeast Memphis TJX operation is 40 workers with an annual compensation total of $1.4 million, or an average of $34,619 each.
TJX plans to lease 207,024 square feet of the facility during the first 18 months of operations before it grows into the total 414,504 square feet of Chickasaw D. Upon being granted the PILOT incentive, TJX requests a two-year “ramp-up period” starting March 31.
Allen said achieving the PILOT program is a contingency of TJX’s transaction.
Chickasaw Building D was built in 2002 on 37.46 acres between Hickory Hill Road and Tradeport Drive by Atlanta-based IDI and was previously owned in a joint venture with IDI and J.P. Morgan. USAA bought the 829,464-square-foot building, which is located in proximity to the BNSF Railway Co., in September 2010.
Newegg.com signed a 414,960-square-foot lease at Chickasaw Distribution Center Building D in the first quarter of 2011. TJX is taking the remainder of the facility that was vacated by Flextronics Logistics Inc. in 2012.
While USAA Real Estate administers the funds for Chickasaw Building D, the asset is owned in a separate, private Real Estate Investment Trust called U.S. Industrial REIT III-Distribution.
USAA owns about 5.5 million square feet of industrial space in total in the Memphis area, which puts the insurance company as one of the largest owners of Class A space in the market.
“Candidly, we’re just seeing a tremendous uptick in activity in the overall market,” Allen said. “Really, we only have about 200,000 square feet of space that’s not leased on a term basis in the entire market, which is pretty extraordinary if you think about it from that perspective.”