COVER STORY, MAY 2005

NEW INDUSTRIAL PROJECTS
Kevin Jeselnik

Cedar Crossing Business Park

Located in Baytown, Texas, along the northern shore of Galveston Bay, Cedar Crossing Business Park is an expansive industrial center. Not including a 3,000-acre tract of land developed by U.S. Steel for a steel production facility, the park totals more than 12,000 acres of land approved for various manufacturing and distribution. It is the largest industrial park in Texas and fifth largest in the world. Cedar Crossing LP acquired the land from U.S. Steel after an extensive sales process between 2000 and 2002.

“The strength of the property is that it has all the heavy infrastructure that is necessary,” says Mike Shields, director of the Baytown Economic Development Foundation, which is working with the developer and Cushman & Wakefield to market the property. “There are copious amounts of potable water, electricity and natural gas — there is a pipeline corridor channeling 14 different products through the property. Plus, it has barge access, highways and two rail lines serving the area.”

The park’s intermodal capabilities offer an array of distribution options. Interstate 10 is just north of the park, and more than 5 miles of the Grand Parkway — Houston’s third circumferential freeway, which is now under construction — are located inside the park’s boundaries. The Union Pacific and Burlington Northern Santa Fe railroad networks also bisect the park, giving it dual rail capability. Also, a bill that would designate the portion of the state highways inside the park as heavy-haul roads recently passed through the Texas House of Representatives and is making its way through the Senate.

The greatest asset of the park is its proximity to the Port of Houston. “In the past, a majority of imported goods have come in from California and have been shipped east by truck or rail,” says Shields. “Now, its distributors are putting everything on ships that can come through the Panama Canal to the Port of Houston. Businesses are bringing larger loads to a more central part of the country for distribution.”

Because of its location near the Port of Houston, Cedar Crossing is targeting primarily logistics and distribution users seeking centrally located facilities for international importing and exporting. “From a geographical standpoint, the site is coming into play due to the ease with which you can transport products into Houston and across the country,” says Kelly Parker of Cushman & Wakefield’s Houston office. “The east side of Houston has far less traffic than the more heavily populated west side. Also, the site is outside of Harris County in Chambers County and can offer more favorable incentives to new business. We can offer very competitive prices for very large sites.”

The Home Depot occupies 750,000 square feet within the park and Seapac, a dry chemical packaging company, resides in more than 1 million square feet. Wal-Mart recently completed construction of a 2 million-square-foot building in April. A second 2 million-square-foot facility is expected to come on line in July. The two facilities will serve as a regional distribution center that will service six to seven states.

Stafford Park Business Center

On the southwest side of Houston a new park is going up in the suburb of Stafford. The 278,224-square-foot Stafford Park Business Center is underway on 17 acres, convenient to U.S. Highway 59 and Beltway 8, which circles Houston. Developers Trammell Crow Company and ING Clarion Partner’s Lion Industrial Trust are constructing three speculative light industrial and distribution buildings at once. The two companies have established a fund for the joint development of industrial properties across the country and have built in Stafford before. 

Stafford Park Business Center

The developers broke ground on the three dock-high, concrete tilt-wall buildings in mid-January and expect to complete construction on the shells by September. Space will be built out as it is leased. The park is located on Airport Boulevard and Murphy Road. Building One, a smaller flex facility, provides frontage on Airport. It will total 66,200 square feet of office and warehouse space in 7,000-square-foot to 20,000-square-foot floorplates. Buildings Two and Three will total 133,566 square feet and 78,458 square feet, respectively. Each distribution/warehouse facility will feature 24-foot clear ceiling heights and 117-foot truck courts.

Trammell Crow and ING Clarion decided to include office space in the smaller building to attract a great mix of users to the park. “We want the project to attract a range of different tenants in size and uses,” explains Casey. “And having a rear-loading building fronting the most visible street takes advantage of the frontage and allows us to target another sector of tenants that typically want higher percentage build-outs and the truck doors on the back side.”

Casey expects to draw a range of tenants including distributors of medical supplies and consumer home goods, light industrial service companies, and showrooms. In its effort to garner attention in the crowded Houston industrial market, Stafford Park will be competing with a number of new developments underway in the southwest Houston submarket.

Cornerstone Industrial Park

In San Antonio, locally based commercial real estate firm Cross & Company is developing a master-planned industrial park on 297 acres. Located at the intersection of the Loop 410 bypass and Interstate 10, Cornerstone Industrial Park is approved for a total of 25 buildings and more than 4 million square feet. The park originally was developed by the now-defunct San Antonio Savings and Loan in the late 1980s, but has seen only one building completed until now. Approximately 2 years ago, Cross & Company brokered the sale of that building for the buyer and the park leapt onto its radar. The company saw an opportunity to develop new industrial product in a park with all the infrastructure already in place for a market that desperately needed it.

Cornerstone Industrial Park

All of the buildings in Cornerstone will feature some unique aspects aimed at helping tenants run efficiently and save money. Every warehouse will feature skylights in every bay, a white thermo-plastic, polyolefin roofing that will reflect light and lights operated by three separate switches. Cross & Company hopes this tenant-centric approach will aid in leasing the property. The first building is being completed now. It will total 187,932 square feet with 32-foot ceiling clear heights and 134-foot deep truck courts.

The park is being developed in a market in which Smith believes it will flourish. Industrial traffic in San Antonio is hindered by congestion created at what Smith calls San Antonio’s Main-and-Main location of Interstate 35 and Rittiman Road. “That congestion essentially bisects the city so that industrial companies want to be either north or south of Rittiman Road,” he adds. This dilemma drove Cross & Company to develop Cornerstone south of I-35 to deliver product to users seeking to locate south of the city. The company has another park north of Rittiman, Tri-County II Industrial Park, at I-35 and Loop 1604, the city’s outer bypass. There, it is developing two additional speculative buildings in a proven market to service the north side of the city. 

Smith anticipates great interest in both parks in 2005 and beyond in conjunction with Toyota’s 2003 announcement that it will develop an $800 million manufacturing facility for the Toyota Tundra pick-up truck in San Antonio.

Lakeside Ranch Business Park

The Dallas/Fort Worth (DFW) market is arguably the largest and most competitive industrial market in Texas. The DFW marketplace is brimming with activity, as approximately 2.9 million square feet of industrial product was under development in the first quarter of the year. 

One large property underway is the Lakeside Ranch Business Park. It is located 2 miles north of the Dallas/Fort Worth Airport in the town of Flower Mound. LNR Property Corporation of Miami is developing Lakeside Ranch and the park is being marketed by CB Richard Ellis. Located on 230 acres at the intersection of Lakeside Parkway and Gerault Road, the master-planned park will have up to 16 buildings and more than 3.5 million square feet of space. The estimated cost of the project at total build out is $160 million.

“DFW is one of the largest industrial markets in the country,” says Lang Cottrell, regional president of LNR Property Corporation in Dallas. “The submarket surrounding the DFW Airport is seeing the highest growth and probably the largest demand. There is a movement from the older, more established industrial markets — where there is really no new land — to the northwest, in towns like Flower Mound and Southlake.”

According to Cottrell, the industrial product has migrated to the northwest behind the general population, lured by available land, easy access to the airport and proximity to the main transportation corridors of Interstate 35, Interstate 635 and State Highway 121.

The park will feature buildings ranging from 20,000 square feet to 800,000 square feet with a minimum truck court depth of 130 feet, following the trend of providing a variety of footprints within the same complex. The town of Flower Mound already has installed much of the infrastructure, including roads and some site work. LNR plans to begin work on Garden Ridge Drive, a new north/south arterial that will bisect the park, as well as additional grading, landscaping and site work this month with completion by the end of the year.

Lakeside Ranch will be located at the point-of-entry into Flower Mound, and LNR has worked closely with the town to ensure that the relationship is beneficial for all involved. “The town was sensitive to the type of building, the design, the setbacks and the landscaping that would be along the major roads,” Cottrell says. “We have designed this project to have a very high-end look. We worked with the city to make sure that we were sensitive to environmental issues such as the movement of trees and the retention of an existing creek that runs through the property. We spent a lot of time designing a restoration of the creek area, which will ultimately be a walking trail that flows through the middle of the industrial park.”

The park is targeting distribution and warehouse users, but it is preparing for a mix of tenants. LNR will begin development of speculative property upon completion of the infrastructure.

What originally attracted LNR to the property were the unique barriers-to-entry in the area. In many submarkets that are not yet built out, there seems to be a limitless amount of land to develop. In this northwest sector, natural barriers define the amount of development that eventually can be completed.

“Even though there still are a number of parcels of land that can be developed over the next couple of years, this submarket will eventually come to be built out and short of supply,” says Cottrell. With the industrial market in the DFW Metroplex on the rise and the steady increase in activity in the northwest submarket, Cottrell expects Lakeside Ranch Business Park to take 5 to 7 years to build out.

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