Town Maps Out Foreign Trade Zone for 395,970-SF Win

ATHENS, TX-In a classic case of David and Goliath, a city with 12,000 residents has one-upped Dallas/Fort Worth by hooking a top-ranked international corporation that spent two years scouring the metro area for a distribution site. The dealmaker for the 395,970-sf win is a Foreign Trade Zone designation to put the site on par with AllianceTexas, but at a far cheaper cost for the space.

Schneider Electric, the Paris-based parent for Square D, will be opening doors in mid- to late August on a long-vacant Heilig Meyers' distribution center at 1651 Enterprise Dr. in the Athens Medical Manufacturing and Technology Park. The building was bought for $6.2 million by Chicago-based First Industrial Acquisitions Inc., which was up against several others in a competitive bidding scenario to acquire the property and lease it for the long term to Square D, Mark Pasquella, managing director of global corporate services for CB Richard Ellis Inc.'s Chicago office, tells GlobeSt.com.

The Schneider deal for a 300,000-sf facility, existing or build-to-suit, was in the market a year before the search was abandoned in August 2004. The search crisscrossed five southwestern states, but had narrowed to Dallas/Fort Worth before it was dropped, says Pasquella, whose CBRE Chicago team handles Schneider's real estate in the US, Canada and Mexico. He says another Square D operation will hold onto a portion of 204 Airline Dr. in Coppell, north of Dallas, although it's subleased the majority of its commitment in the multi-tenant building.

Pasquella says Schneider resurrected the deal after reevaluating its distribution network earlier this year. As a result of the Athens lease, a Bakersfield, CA facility will be shut down, he says.

E. Herbert Gatlin, executive director of the Athens Economic Development Corp., says the Foreign Trade Zone application was submitted in March for two industrial parks, totaling 185 acres. It passed inspection; the application's reached the comment period. Gatlin says the US Secretary of Commerce's approval should be in hand by year's end. "It will give us the same zoning as Alliance Airport," he says, adding there's 50 acres of developable, untapped land that's now on corporate radar screens.

Gatlin says city officials don't offer tax abatements and long ago ruled against Freeport exemptions so the trade zone designation was the way "to give us a little bit of competition to Dallas/Fort Worth." He says Square D imports more than half of its inventory, which amounts to $35 million to $45 million per year, so the designation was the key to landing the deal.

According to Gatlin, Square D's corporate chiefs expect to ship up to 47% of its North American inventory from Athens, which gains 125 jobs with the win. The firm supplies electrical and industrial control products, systems and services.

J. Holmes Davis IV, senior vice president for the Philadelphia-based Binswanger Corp., sold the facility on behalf of Central Fidelity Properties, a Wachovia Bank affiliate that took it back when Heilig Meyers went bankrupt. He says the 35-acre asset, listed for $7.75 million, has been eyed by the likes of Bentonville, AR's Wal-Mart Stores Inc. and Auto Zone Inc. of Memphis. It also was under contract a year ago, but the deal fell apart.

Not only did First Industrial get a building with 40-foot clear height, 45 dock doors and 11,370 sf of office space--all in nearly ready-to-go condition--but it got an expandable design that can be doubled in size. "The facility's layout and size fit almost perfectly," Davis says. Plus, he adds, "they were pretty aggressive on the incentives. They were able to put it together and lay it on the table."

For First Industrial's Dallas chief, Rob Riner, it's the fourth acquisition this year in a pipeline with a portfolio and a few more one-offs ready to be inked in the coming weeks. "We're buying them with and without tenants," he says. "Not all are at ground zero in Dallas. We're starting to extend out a bit. It's a good, quality tenant...and a class A facility." The reach on the Athens deal is 72 miles southeast of Dallas and 105 from the Fort Worth line.