346,515-SF Trade Jumpstarts Renewal Talks

HOUSTON-In an off-market transaction, Sealy & Co. has acquired a fully leased, 346,515-sf distribution center on a 20-acre tract in the northeastern tier. The new owner, faced with a ticking clock on a single-tenant lease, has jumped into retention talks with Exel Logistics.

Sealy, which has headquarters offices in Dallas and Shreveport, LA, has been making a return play for industrial product in the Greater Houston market after selling its portfolio a few years ago. With that as a well-known fact, NAI Houston senior associate Barrett Gibson and principal John Ferruzzo put the single-tenant, net-leased deal for 8855 City Park Loop on Sealy's table. "With Sealy coming back into the city, it seemed like a perfect fit for the two parties," Gibson tells GlobeSt.com.

Industry sources say the asset brought in $9 million to $10 million for the local seller, Grocers Supply Co. Inc. The deal definitely is one of, and conceivably the, largest industrial building that will trade this year--outside of a portfolio.

According to Real Capital Analytics, 20 industrial properties tagged at more than $5 million apiece have changed hands since the year began. The sales have generated $188 million at the closing tables. The average sale price is $47 per sf, up $6 per sf in the past year.

Exel Logistics is marking its seventh year in the 21-year-old distribution center although it does occupy several other structures in the City Park East Industrial Park. "There's some term left," Ferruzzo says about the in-place lease, "but Sealy's operating under the mindset of renewing Exel or finding one or two tenants to lease the building."

The new owner, Sealy City Park Partners LP, has added leverage for the renewal talks due to market dynamics: a 5.2% vacancy in a 381.7-million-sf industrial inventory. The distribution sector is the absorption leader, accounting for 682,253 sf of the 2.8 million sf that's been filled year to date, according to the latest Grubb & Ellis Co. report.