Monday, March 12, 2012
Smart Buy Bean plant purchased in weak industrial real estate market
FORT WORTH -- At first glance, the purchase of the former Ranch Style Beans manufacturing facility in East Fort Worth may indicate a strengthening pulse of the broader local industrial real estate submarket, but the facility’s buyers said they picked up the property as more of a one-off from their 2012 strategy, not because they see this as a particularly opportune time to plunge back into the industrial sector.
Fort Worth’s Conti Warehouses purchased the 212,000-square-foot heavy industrial facility from Allens Canning Co. late last month. It was the firm’s second acquisition this year. The first was the 103,000-square-foot vacant Target building on Cherry Lane in West Fort Worth.
“It just popped up … ,” said Bruce Conti, the company’s president. “It was a pretty good deal. And it goes back to our roots as an industrial provider.”
But Conti’s other buildings, including a couple it plans to purchase this year, are slated for office or retail conversion, or, at the very least, light industrial tenants – nothing heavy. The Target facility, which Conti closed on in early January, is also slated for multi-tenant retail, light industrial and office use.
“We aren’t trying to build out too many traditional industrial buildings right now, even though Ranch Style is that particular type of asset,” Conti said. “Right now we’re trying to focus on some redevelopment – could be retail, could be closer to office conversion – and work on that for a while.”
By “a while,” Conti means three or four years, at least until the pickings run slim. Right now, his firm is focusing its efforts on acquiring “distressed buildings in decent office locations.”
The next acquisition is a 74,000-square-foot warehouse in the 4000 block of Lubbock Avenue in South Fort Worth, which Conti plans to also convert into mixed-use retail and office space with perhaps some distribution. Conti and his company’s vice president, Ryan Wood, said they’re also preparing to purchase yet another building for office build-outs this year, but he declined to go into any further detail.
Once these prime locations run out, Conti said, he and his staff will return to their traditional niche: heavy industrial space such as the canning facility.
It’s a timely strategy. Local real estate insiders expect 2012’s industrial submarket, unlike the retail and office sectors, to remain tepid as the economy continues its slow climb out of the recession.
Todd Burnette, managing director of Jones Lang LaSalle’s Fort Worth office, told the Fort Worth Business Press early this year that he doesn’t expect the local industrial market to regain much of its pre-recession steam until 2013 at the earliest.
He noted distribution as a possible exception as more and more big-box stores beef up their inventories to keep pace with growing consumer demand.
If Conti Warehouses is any indication, heavy industrial demand may not be growing, nor is the sector in a freefall. Most of Conti’s total portfolio, now exceeding 2 million square feet, is devoted to heavier industrial.
And, as the firm’s president pointed out, his overall occupancy rates are above 90 percent, a sign there’s still plenty of local industry that needs space.
Source: Fort Worth Business Press