Wednesday, August 09, 2017

Biggest DFW food distribution hub to hit the market in a decade could attract major operator

The biggest refrigerated food distribution facility to land on the market in Dallas-Fort Worth in the last 10 years is being shopped around town and could bring a major grocery operator to the region.

Associated Wholesale Grocer's decided to consolidate its regional operations in Oklahoma and put the nearly 1.15 million-square-foot facility on a 90.68-acre tract at 7550 Oak Grove Road in Fort Worth on the market.
The distribution hub also includes nearly 400,000 square feet of freezer, cooler and other temperature-controlled space, which makes it a compelling proposition to a grocer, said Kevin Kelly, a senior vice president in CBRE's food facilities group.

"There's nothing like this on the market in North Texas," Kelly told the Dallas Business Journal."There's a pent-up demand from a lack of existing product. We work with a lot of companies and this is right where you want to be if you are a grocer. This is a desirable corridor that serves the broader region in Texas and its surrounding states."

The Fort Worth facility sits within the Interstate 20 corridor, which is a major east-west connector in Texas. Kelly said the allure of the property will likely bring in a full-building occupier wanting a discount to build-to-suit prices.
"This is about a 50 percent discount versus a built-to-suit effective lease rate," he added.

The Interstate 20 corridor has several newly-built speculative distribution facilities and warehouses that have yet to lease on the ground, but they don't have the refrigeration requirements needed by grocers and it's an expensive retrofit, he said.

Kelly and his CBRE team including David Sours and Lucy Durbin have already begun touring interested parties through the distribution facility. And Kelly said he already has more tours in the next few weeks.

He doesn't expect the largest refrigerated food distribution facility in North Texas to last long on the market, given the interest from grocers. Kelly declined to share the property's price tag, saying, "It's not actually priced, but it will be at a substantial discount versus anything new."

The distribution facility was purpose built for grocery store Albertson's. In a lot of ways, the store overbuilt some of the components that could benefit a new owner. Associated Wholesale Grocers later acquired the property in an off-market deal with the grocer.