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DALLAS-Talk to any Texas broker and you’ll hear that the Lone Star State is a land of plenty. Dallas-Ft. Worth, in particular, is benefiting from other states’ shortfalls, from electricity to low fuel prices to an above-average freeway network.

“I’ve not seen anyone make a distribution decision based on fuel pricing,” Jon Napper, Panattoni Development Co.’s Texas partner, tells GlobeSt.com. It’s the North Texas’ middle-of-the-country positioning that has it reaping the benefits as nationwide distributors look to consolidate. As a result, big boxes are in. Indianapolis-based Duke Realty has 900,000 sf under construction; Dallas’ Champion Partners and Argent Property Co., each are bringing 600,000 sf out of the ground; and the Sacramento-based Panattoni has a little more than one million sf in two buildings rising. All, says Napper, are spec in a market already boasting 400 million sf of industrial space.

What Napper is noticing is that construction prices, more notably subcontractors, rates are slicing 10% off going rates in the wake of a construction slowdown, here and elsewhere. “I’ve seen numbers that shock me,” confides Napper, “but it’s because people want work.”

In the DFW region, Napper says incoming and expanding existing operations eye up freeway access more so than railroad lines before settling on a location. The intermodal yards are a plus, but they are few and far between. Most of the region’s rail lines lead to AllianceTexas and that, says a Hillwood contact is, as the commercial says, “priceless.” And close by is Alliance Airport, a leading cargo facility worldwide, thanks to FedEx’s presence.

Houston is holding firm as one of the nation’s leading industrial markets. Four Gulf Coast ports within a 50-mile stretch are factors that led Home Depot and Wal-Mart to undertake large distribution projects.

Kent Fuller, vice president of marketing for the Greater Houston Partnership, believes the bulk of Houston’s strength is coming from expansions of existing distributors and logistics providers rather than an in-migration from other states. This year, inquiries are no greater or less than prior years. He concurs with Napper that fuel prices simply aren’t a driving factor when it comes to site selection.

Houston is more diversified economy than in years past, but it still revolves around the energy industry and gasoline prices are just a drop in the bucket compared to states like California. Good highways, good rails, good ports and good fuel prices are drivers that Fuller likes to boast about. CB Richard Ellis’ $46-million Alamo Crossing Commerce Center is proof, he stresses, of the confidence in the market.

CB Richard Ellis senior vice president Mike Hill reports Houston trading in the 300 million-sf inventory is keeping vacancy hovering around 8%. This year’s deal-making isn’t any higher than before, “but it hasn’t fallen off any.” What he is noticing is that today’s distribution and logistics tenants want higher finishes than in yesteryear. Delivering a cold dark shell costs about $25 per sf, but that’s just not want the 2001 tenant wants.

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