EastGroup Properties pursuing spec warehouse in Tampa
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Oct 24, 2014

Bullish on Tampa Bay's industrial real estate market, EastGroup Properties is moving ahead with a new speculative distribution center.

EastGroup, based in Jackson, Miss., is under construction on the Madison Distribution Center, at 4934 Joanne Kerney Blvd, east of U.S. 41 and west of Interstate 75 in the Palm River area. A team of CBRE Group Inc. brokers in Tampa, led by First Vice President Rian Smith, have been hired to market the property.

The Madison development consists of two buildings; one is 68,000 square feet, and the other is 59,000 square feet. An existing EastGroup tenant that occupies 12,000 square feet in Tampa is expanding and will take 32,000 square feet in the new center, making it about 25 percent pre-leased. Concrete slabs for both buildings were poured this week, and the targeted completion date is March 2015.

The buildings will have warehouse and office space with large windows on the front of the building.

EastGroup acquired the property from ProLogis, when the industrial giant was exiting the market, and has been waiting for the right time for a new development.

That time, it appears, is now. The project is driven by improving occupancies and rental rates in Tampa, said Chris Segrest, EastGroup vice president.

EastGroup owns 4 million square feet in the Bay region, and leased 150,000 square feet in the third quarter, pushing its portfolio to 95 percent occupancy. That activity, combined with tenants who want new, high tech, more efficient buildings, drove the decision to develop Madison.

"We're finally seeing the tenants need those things," Segrest said. "This market's not strictly about price any more."

Smith said CBRE is working with Tampa Hillsborough Economic Development Corp., to ensure that companies looking for space in the market know that this building is under way. He said CBRE will target third-party logistics companies, which handle supply chain and distribution functions for other companies, as well as ecommerce operations and companies that supply homebuilders.

Pre-recession, many of the region's warehouses were filled with building supplies, from lumber to windows to screen doors. A few years into the housing recovery, Smith said, those warehouse users are looking for space again - but this time around, those users are not the overwhelming tenants in the industrial market, making it a less risky, more diverse market.

"We're seeing not only organic growth," Smith said, "but growth from out of state coming in."

Ashley Gurbal Kritzer is a reporter for the Tampa Bay Business Journal.