Duke Realty Stokes 2M-SF Spec Bulk Warehouse Program

DALLAS-Marking its second consecutive win as NAIOP developer of the year, Duke Realty Corp. is hitting the streets with a spec program to add at least 1.3 million sf to the North Texas industrial market. And if rumor proves fact, a 600,000-sf bulk warehouse on ground-leased airport land will be added to Duke's drawing board.

The NAIOP honor, accorded yesterday, comes just as the Indianapolis-based Duke's Dallas/Fort Worth team breaks ground on a 755,000-sf spec bulk warehouse in its 130-acre Grand Lakes Business Park in Grand Prairie. The $22-million Grand Lakes I will have 32-foot clear heights, one dock door for every 4,000 sf, roughly 200 trailer parking spaces and expansion capabilities to one million sf. Delivery is penciled for the fourth quarter.

"It will have everything you can imagine," says Jeff Turner, Duke's senior vice president in Dallas. "It will be a distribution company's dream." To sweeten the scenario, the cross-dock giant will sit on a rail-served site within eyeshot of Interstate 30 at MacArthur Boulevard. The midway positioning between Dallas and Fort Worth will be marketed for $2.85 per sf to $3.25 per sf net, based on tenant finish packages, according to Turner. "We can be very aggressive on pricing because it's in a TIF [tax increment financing]," he says, citing the extra perk of a Triple Freeport exemption.

Designed by GSR Andrade Architects Inc. of Dallas, Grand Lakes I is the first of three mega-warehouses planned for the park. Duke's in-house team will build and lease the spec space. "We've designed it and prepared ourselves that if we have to multi-tenant it we will," Turner says.

Duke's eight-million-sf industrial portfolio is 96% leased, one of the factors that helped it to win yesterday's award. "We had a good well-rounded year in 2005," Turner says. The dealmaking drove the completion and near-record sale at a sub-6.5% cap rate of the 687,500-sf Del Monte Foods Co. warehouse in Fort Worth; 230,000-sf launch of the $100-million, 70-acre Duke Bridges office park in Frisco; and construction starts on Freeport XIV and XV, 143,000-sf spec warehouses in Coppell.

Turner says the 2006 spec program will be mostly bulk warehouse space although an office building isn't a remote possibility. Turner kicked off the spec program with the March disclosure of a 39-acre buy for a 624,000-sf warehouse in South Dallas. "In Dallas, you can't afford to be the last in the pack to get your spec product up," he tells GlobeSt.com. "We have faith in our relationships with the brokerage community." And, he stresses, it's those relationships along with Duke's 35-member team in Dallas that get credit for the NAIOP win. "Those relationships mean everything to us," he says, "and that's why we're not afraid to build spec in Dallas."