December 1, 2011
By Barbra Murray, Contributing Editor
It’s not something you see every day, but Prologis Inc. just made it happen. The industrial real estate company secured a tenant to occupy Prologis Tolleson Distribution Center 1, a 302,600-square-foot facility in metropolitan Phoenix, in its entirety. Discount fashion retailer TJ Maxx will call the property home.
Prologis picked up Tolleson 1, located at 9704 W. Roosevelt Rd. in Tolleson, for approximately $10 million in cash in late August of this year and wasted precious little time readying the 16-year-old distribution center for occupancy by a tenant seeking Class A accommodations. Mission accomplished.
The company had its finger on the pulse of the metropolitan Phoenix market when it snapped up the property in the city’s southwest submarket, well aware of the demand for a certain type of industrial space in the area.
“If you look at the Phoenix industrial market as a whole, big deals are happening in the southwest submarket,” Mike Kasulaitis, a vice president with Voit Real Estate Services, told Commercial Property Executive. “That’s where they’re occurring and as a result, the numbers in absorption, which have been positive, look pretty rosy.” As per a Voit report, positive net absorption in the southwest submarket had reached 997,900 square feet for 2011 by the close of the third quarter, outpacing all other major Phoenix submarkets, some of them by a wide margin.
The lease at Tolleson 1 is a prime example of what is transpiring in the local market right now, according to Kasulaitis. And demand is within inches of outpacing supply. “There are very few large contiguous blocks of industrial space available, in fact, you can count them on one hand,” he said. It’s a well-known fact. When Jones Lang LaSalle orchestrated the sale of the Tolleson property to Prologis three months ago, the firm noted that once the facility had been leased, only four distribution buildings offering blocks of space of 200,000 square feet or more would remain available in the southwest area, a far cry from the 24 such properties that were available in 2008.
“Any type of speculative construction that we perceive happening is probably going to be somewhere along the lines of that type of space,” Kasulaitis said.