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COPPELL, TX-What’s it take to get the biggest deal of the year, perhaps several years, in Dallas? Aside from hard negotiations, the Container Store is walking away with $2.4 million in municipal incentives over a 10-year period, one of many pluses that clinched the deal for Indianapolis-based Duke Realty Corp.

The City of Coppell stacked Duke’s deck with the incentives while the developer, as did its competitors, put a $32-million, campus-like setting on the table for a hometown star that’s ranked second in Fortune magazine’s “Best 100 Companies to Work for in America.” Duke’s Jeff Turner, senior vice president of the Dallas group, tells GlobeSt.com that “Coppell was very aggressive and really stepped up the offer.”

Ground will break in first quarter 2003 on the 46-acre project. The tract is situated on the southeast corner of Duke’s Freeport North Industrial Park, where a lake, a city park and a soon-to-come nature trail turned the heads of Container Store decision-makers.

Duke will roll out a 1.1-million-sf building. The Container Store is taking 650,000 sf upfront at the spring 2004 delivery and a “must-take” of another 150,000 sf in the first three years. As for the balance of Freeport X, Turner says “we have plenty of time to run down good prospects.”

Kip Tindell, CEO and co-founder, says the short list was pared to three developers, all offering “great sites.” The city’s offer and Duke’s terms were important, but the amenities also were key to the final decision. “We’re the kind of company that really eats that stuff up,” he says. Apparently so since the Container Store signed a 13-year agreement in a series of leases, he confides to GlobeSt.com.

According to the city, the package for the first five years calls for a 50% tax rebate on inventory, 75% tax abatements for business personal property and real property and a 100% sales tax rebate with a cap of $50,000. For years six through 10, the Container Store gets a 100% tax rebate on inventory, 85% tax rebates for business personal property and real property and a 50% sales tax rebate, again with a $50,000 ceiling. The terms for business personal property and inventory will carry over to any expansion within the building above the original 650,000 sf.

The city calculates the incentives result in an annual savings of $240,000 or $2.4 million over a 10-year term for the Container Store. The city’s take in the deal: $100,000 in annual revenue and upward of 450 jobs. The firm now employs 400.

The design calls for 75,000 sf of headquarters space and 575,000 sf for distribution. The firm now leases 350,000 sf for office and distribution space at 2000 Valwood Parkway, owned by Realty Associates IV LP, and 155,000 sf of ancillary distribution space at 2022 McKenzie in a ProLogis Trust-owned building.

The idea behind the build-to-suit was to get everything and everyone on the same campus for cost efficiency and its corporate culture, says Tindell. The firm has 27 stores, with one more set to open Oct. 26 in San Francisco. Earlier this year, stores opened in Paramus, NJ and Marin County, CA. A Manhattan location will come in 2003.

Jack Fraker, point man for the Cushman & Wakefield of Texas Inc. negotiating team, says 10 to 15 sites were reviewed. “It was a complicated negotiation. We had to contemplate the future expansion and simultaneously negotiate with various municipalities,” he says. It wasn’t an easy choice since “Dallas has some of the best US developers,” he stresses.

Valerie Richardson, the Container Store’s vice president of real estate, assisted Fraker’s team in the talks. The C&W team consisted of Susan Pausky, Randy Baird and Mari Jones. Duke’s side of the talks were handled by Turner and Bob Rice.

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