COPPELL, TX-With plans to consolidate and expand its localdistribution operations, SP Richards Co. has leased 212,776 squarefeet in Duke Realty Corp.’s Freeport VII building. The officesupplies and furniture distributor signed a long-term lease for thespace at 631 South Royal Lane.

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Currently, SP Richards occupies 130,324 square feet in twodistribution facilities in Carrollton. The company leases 55,600square feet in Duke’s Frankford Distribution Center II and alsoowns a 74,700-square-foot facility nearby.

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The Freeport VII building will replace those two facilities andwill also allow for an 82,450-square-foot expansion, according toJeff Thornton, senior vice president of Duke Realty’s Dallasoperations. “The Frankford lease was expiring, and consolidation issomething SR Richards has been contemplating for a couple of yearsnow,” he says, adding that the firm has been “busting at theseams.” “They felt the timing was right to make a move.”

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Thornton tells GlobeSt.com that SP Richards wanted to stay inthe submarkets north of DFW Airport and identified 23 possiblebuildings that would accommodate its needs. The companyshort-listed three buildings, one of which was Duke’s Freeport VII,a 383,925-square foot warehouse/distribution located off I-635 andFreeport Parkway.

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Freeport VII had been empty since Exel Logistics lost a contractand vacated the space. It is one of several buildings that Dukeowns in the submarket; the company owns 4 million square feet inthe Freeport North industrial park.

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“We definitely had the space for SP Richards, and we’ve had agood relationship with them, but it was clearly a risk because wewere competing with the market for the deal,” Thornton explains,pointing out that the occupancy rate in the North DFW airportsubmarket was 18.1% at the end of the third quarter, according toCoStar. “We have the space and the location, but so do a lot of ourcompetitors. We had to work to make the deal.”

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Thornton says Duke won the deal because the eight-year-oldFreeport VII checked all the boxes on SP Richard’s list. “We had arelatively new, second generation building that already had a lotof finish out – the warehouse was already air conditioned and ithad 10,000 square feet of office space,” he notes.

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Randy Wood, Duke Realty’s vice president of industrial leasingin Dallas, negotiated the deal. SP Richards will move into its newspace on April 1, 2011. With the new lease, Freeport VII is 55.4%occupied, leaving 171,149 square feet available for lease.

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“Over the years, the North DFW Airport submarket has been anoutstanding submarket in terms of absorption and occupancy, butduring the last development cycle, there was a lot of newdevelopment,” Thornton says. “The increased vacancy is more of afunction of overbuilding – it’s the oversupply that is causing theheartache right now.”

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