VOL. 9 | NO. 44 | Saturday, October 29, 2016
SPECIAL EDITION: Commercial Real Estate
Industrial Real Estate Competition Heats Up Between DeSoto, Marshall
By Madeline Faber
A North Mississippi industrial park more than 10 years in the making is reaching the finish line. By next May, Hillwood Investment Co. will wrap construction on a 947,000-square-foot warehouse on the final parcel in the DeSoto Trade Center.
Construction of the final building in the DeSoto Trade Center is underway and expected to be completed next May.
(Memphis News/Andrew J. Breig)
Coming in just under a million square feet, Eastgate Building III is the largest warehouse in DeSoto County. And its construction comes two years after Panattoni Development Co. completed its 1 million-square-foot warehouse in the Global Gateway Logistics Center, which sprawls across Marshall County, Mississippi, and Fayette County, Tennessee.
That 1 million-square-foot warehouse, fully occupied by truck maker Volvo Group, launched Marshall County as a veritable industrial submarket and kicked off a competition between it and longstanding industrial player DeSoto County.
“DeSoto County was a pioneer in the construction of speculative space and had really been the market leader for a number of years in the Memphis market,” said Jim Flanagan, president and CEO of the DeSoto County Economic Development Council. “And then when properties became available with transportation infrastructure improvements and investment opportunities in Marshall County, then they began to also building speculative buildings.”
Marshall County is still in the fledgling stage, with 5.7 million square feet across 32 buildings, compared to DeSoto’s 38 million square feet across 137 buildings. DeSoto County is seeing a 5.5 percent vacancy while Marshall County is completely occupied, according to third-quarter data from Xceligent, a nationwide provider of property and listing information for the commercial real estate industry.
Both counties are expanding, with 4.5 million square feet of construction activity underway between the two areas. Of that total, 2.8 million square feet is speculative development, according to Xceligent. This year, the Gateway Global Logistics Center secured the largest lease of the year with a 1.5 million-square-foot building intended for tire dealer TBC Corp.
Flanagan said that Hillwood’s Eastgate Building III, which is set for completion next May, will help DeSoto County “keep its presence in the marketplace viable.” The building will join other warehouses in the DeSoto Trade Center, which names Helen of Troy and Kenco Logistics Services among its tenants.
Tim Mashburn, vice president with Colliers International, said that easy access to labor via Interstate 55 gives DeSoto County a competitive edge.
“We feel really confident about building something this size with 3 million square feet of Class A deals signed this year in DeSoto County alone,” said Mashburn, who is marketing Eastgate Building III for one or two large users. “When you're building a building this big with all the labor that's going to be needed for it, we feel the location is a competitive advantage.”
Marshall County has been staked as an eminent industrial submarket through the joint partnership of Panattoni and landowner William Adair. The 1,500-acre Global Gateway Logistics Center is adjacent to the Norfolk Southern intermodal yard, which feeds business into the logistics center.
DeSoto County, on the other hand, has closer access to the Memphis International Airport. It also boasts a stronger residential population and amenities that would attract a company’s relocation.
Jeb Fields, vice president of Cushman & Wakefield/Commercial Advisors, said that competition between the two counties will continue, but Marshall County has “a long way to go” before it overtakes DeSoto County.
“(Marshall County) has got fantastic connectivity, and you have a decent labor shed,” Fields said, “but it's just not quite as dense of a labor shed as Olive Branch and Southaven.”