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AUSTIN, TX-Three Central Texas commercial real estate veterans have formed a joint venture to purchase industrial lots for the development of small- to medium-sized industrial buildings with fenced yards in the greater metropolitan area. Ed Fleming, Jerry Reed, president of Development 2000, and Frank Niendorff, president of NAI Commercial Industrial Properties Co., have formed Royston Royalty Limited, through which they plan to develop as many as 30 such buildings over the next five years, either speculatively or as build-to-suit projects.

Fleming obtains the financing; Reed constructs the buildings; and Niendorff takes care of the leasing. To start, the trio has acquired and has begun construction on three lots in the newly-developed Springbrook Business Park located at the intersection of Royston Lane, Picadilly Drive and Central Commerce Drive in Pflugerville, TX, near Interstate 35.

Roylston is developing three speculative metal industrial buildings, two with 5,200 sf and one with 11,200 sf. Future buildings by Roylston will range in size from 5,000 sf to 50,000 sf. Niendorff says the trio is already planning its next three buidlings, for which they have properties under contract. They plan to start the next three buildings in December, when the first three are delivered.

“My partners and I have been in busines for over 30 years and we decided this would be a good type of investment; its fairly low risk, easy to finance and very marketable for leasing,” Niendorff tells GlobeSt.com. “This kind of property, when well located, is always in demand in the Austin area.”

The asking rate for the buildings and associated yard space will be a blended rate in the mid $0.60s per sf per month, including a tenant improvement allowance to build out the space, says Niendorff, who expects to fill the buidlings with small companies that see an advantage to the outside storage, not available in typical business park developments.

“It could be a nursery or wholesaler that not only needs warehouse but also yard space to park fleet vehicles,” says Niendorff. “Also, in a recessions, people are always looking for ways to cut expenses; we’re seeing some tenants that might have 20,000-sf of warehouse space to store stuff in but have very durable products that could just as well be put on pallets and put outside.”

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