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Local officials say development shows strong commercial real estate market near DFW Airport
Majestic Realty Co. is bringing a 1.1 million-square-foot speculative logistics center online this fall just north of Grapevine off SH 121 in Lewisville, and local officials said the project’s existence points to the strength of the real estate development market throughout the area.
The project to build and lease the center’s fifth building is not the first large development on the site for Majestic. The company most recently leased a 1.3-million square foot building at Majestic Airport Center DFW to Kellog Co. in 2011.
Lewisville Economic Development Director Nika Reinecke said the new building will be finished in October or November, and Majestic has kept any news about prospects for a tenant quiet. Lewisville has a 50-50 partnership with the company for the development, building utilities and road infrastructure that serves the multi-building center.
Reinecke said Lewisville takes an active role in such large projects, and would offer tax incentives for a large tenant.
“Our goal is to occupy it with one user if we can,” Reinecke said. “It all depends on who is interested and how everything comes together.”
Even five years ago, projects of such magnitude would have been a tough sell for financing, Grapevine Economic Development Manager Dan Truex said. Now, with space around Dallas/Fort Worth International Airport dwindling, Truex said speculation is on the rise.
“There’s just not as much left anymore to develop,” he said. “It’s very, very tight. The market is very good if somebody can build a building. They have a pretty good chance of leasing that building out. [Majestic’s project] doesn’t surprise me. The feedback I’ve gotten from developers in the past six months is that there’s not that much industrial real estate left around the airport. I get calls from brokers looking for real estate, and the picture is they are pushing outward further from the airport. The market is fairly hot, and it’s just going to press outward as land is scarce.”
John Terrell, vice president of commercial development at DFW Airport, said the area has about 4 million square feet of speculative development, which he said reflects the market is in good shape.
“When markets start getting better, it’s much easier to build speculatively,” Terrell said. “There are a number of tenants in the market looking for space. In the down markets in the 2008–10 time frame, people were not building speculatively. You would find a higher percentage of development done build-to-suit for specific tenants or maybe without the entire building leased out.”
In 2014 the market is hot, Terrell said.
“It’s one of the hottest markets in a while,” he said. “Lenders are trying to compete for developers to take their money.”
The “hot” market will end at some point, Terrell said, as the nature of the real estate market is cyclical, and developers do not want to be the “last man holding space” when the activity slows. Majestic has the backing to be able to power developments such as the speculative building at SH 121, Reinecke said.
“We’re very excited,” she said. “Majestic, being a quality company with a lot of assets behind it, is able to pull these large buildings through.”