AUSTIN, TX-Goodwill Industries of Central Texas has signed a lease for a 124,200-square-foot industrial building in Southeast Austin, which signifies Austin’s largest industrial lease transaction of the year, according to brokers involved in the deal. Goodwill will consolidate two warehouses, offices and retail space spread throughout the region as it expands its services and overall footprint into Kelly Trade Center II, located at 6505 Burleson Rd.

Finish-out work will begin immediately, with Goodwill anticipating to move in early December. “The Southeast submarket is leading the charge out of the doldrums,” says Ken Satterlee, speaking of Austin’s industrial market. Satterlee is president of San Diego-based St. Croix Capital Corp., which purchased the property in mid-2007. At the time, the building was fully occupied with a tenant that eventually moved out, leaving a prime block of large space available.

Kelly Trade Center II will house a job assistance center, community meeting rooms, retail outlet and warehouse space for Goodwill. “This space will provide a more accessible location for all of our Southern community members as they seek out our assistance to help them find, obtain and retain jobs in our Central Texas region,” says Goodwill’s president and CEO Jerry Davis. “It will also help streamline our operations and create added efficiency so that we can generate additional revenue to help more people.”

The consolidation also marks a net expansion of 40,000 square feet for Goodwill, which notes the new space will help their organization provide more resources to serve more people. For example, additional office space will house a new job training classroom and a new conference room will provide meeting space for Goodwill and other local non-profits. In 2009, Goodwill provided more than 43,000 job-related services to more than 13,000 individuals, and has been active locally for more than 50 years.

“One of the reasons Goodwill selected the building was because it offered extensive existing mechanical infrastructure—making the conversion process faster and cheaper.  We were able to present Goodwill with their best option in the market combining the right size, space configuration and strong corporate image,” says John Barksdale, senior associate at CB Richard Ellis Inc., who represented St. Croix.  

Jay Lamy and Zane Cole with Aquila Commercial represented Goodwill in the transaction. Lamy notes the site is ideal from logistical and accessibility perspectives, noting the property’s visibility along a major highway and location along a bus line. “Ultimately, this helps Goodwill expand its mission and put more people to work,” Lamy says.

Todd Tebbe, also of Aquila Commercial, is serving as project manager. Carson Design Assoc. has been selected as the architect, while S Kanetzky Engineering is the engineer. The project is now accepting bids from general contractors.

Barksdale notes other significant industrial leases done this year include Ultra Electronics Advanced Tactical Systems Inc. and US Courier & Logistics—both of which leased 76,800 square feet at Burleson Business Park. Western Paper leased 37,000 square feet and Move Solutions leased 24,000 square feet in the same submarket. As of mid-2010, the vacancy rate for industrial space in the Southeast sector was 22%, according to CBRE research. The city-wide vacancy rate increased from 22% at the end of 2009 to 24% by mid-2010, a level not seen since the late 1980s, according to NAI REOC Austin research.

Also of note is the amount of new construction projects planned for the Southeast, including: the Veterans Administration’s new, 185,000-square-foot clinic; Data Foundry’s new 250,000-square-foot data center, and Ben E. Keith’s new 85,000-square-foot distribution center.

“This one lease is significant, and this series of large deals and new construction announcements is even more so. It’s exactly the type of activity that bolsters a recovery,” Barksdale says.

San Diego-based St. Croix entered the Austin market in late 2005, and according to a prepared statement, quickly amassing a diverse portfolio of industrial, office and retail space as well as raw land in key growth corridors including along the I-35 and State Highway 71.