While the deals have not proceeded, Dallas-based developer Hillwood told the city it responded in the second quarter to a broker’s inquiry on behalf of a client interested in buying 150 to 200 acres for construction of an industrial facility at AllianceFlorida at Cecil Commerce Center.
Based on the land used to develop large fulfillment centers at the Westside business park, that acreage could accommodate an industrial facility of 1.7 million to 2.5 million square feet of space, which would rank among the largest in Northeast Florida.
Hillwood Executive Vice President Dan Tatsch explained Sept. 30 that in this case, the client was interested in a 1 million-square-foot facility, indicating the potential for a lot of paving around the building.
Hillwood also responded to a broker representing a client interested in leasing 1.3 million square feet of industrial space at AllianceFlorida. That also would be the largest at the park.
The city’s master developer at the West Jacksonville business park, Hillwood did not identify the brokers or clients.
“Both of these deals were preliminary inquiries that never got any traction,” said Tatsch.
“We get a fair number of ‘tire-kicking’ requests like this.”
Tatsch said Hillwood has developed about 3.225 million square feet at AllianceFlorida. That includes two 1 million-square-foot centers for internet retailer Amazon.com on about 86.5 acres and online home-furnishings company Wayfair on 80 acres.
In addition, the 300,000-square-foot FedEx Ground Package System Inc. facility, developed by SunCap Property Group LLC, also counts toward Hillwood’s development benchmarks with the city.
As the master developer, Hillwood is required to report its quarterly activity at AllianceFlorida to the city. It submitted its second-quarter report this week for April 1-June 30, 2022.
In other activity during the second quarter, Hillwood told the city it:
• Executed a nonbinding letter of intent with a developer interested in buying 10-20 acres for distribution operations. At the end of the quarter, Hillwood and the prospect were negotiating a purchase-and-sale agreement. Tatsch said Sept. 30 the deal is active.
• Continued negotiating a purchase-and-sale agreement with a prospect interested in buying five to 10 acres for a retail facility. Hillwood and the prospect executed a letter of intent in the first quarter. Tatsch said the deal is active.
• Continued its discussions, which started in the first quarter, with a prospect interested in leasing 400,000 to 500,000 square feet of distribution space. The prospect continued to evaluate its options as of the end of the quarter. “Hillwood is fairly certain that the prospect will, in the near future, agree to terms on a facility with another Jacksonville-area developer,” Tatsch said. He said he could not offer more details.
Hillwood also received and responded to preliminary inquiries from brokers representing clients that were interested in:
• Leasing 400,000 to 500,000 square feet of distribution space. Two separate clients showed interest in that size.
• Leasing about 300,000 square feet of distribution space
Distribution space is one of the area’s hottest commodities, according to industrial market reports from real estate firms. Many companies are leasing warehouse space for e-commerce storage and delivery.
Vacancy is at 3.5% and lower in the Jacksonville market among industrial and warehouse buildings for lease.
Hillwood and the former Jacksonville Economic Development Commission made a 25-year Master Disposition and Development Agreement in 2010 to develop Cecil Commerce Center.
That agreement was 10 years with three five-year renewal options. Hillwood is midway through the first renewal term that started in mid-September 2020.
The agreement calls for Hillwood to build-out AllianceFlorida on about 4,499 acres of city property, the former Naval Air Station Cecil Field, off Normandy Boulevard and 103rd Street in West Jacksonville.
It is designed for the city to share in the profits. As the master developer, Hillwood typically secures the tenant, buys the land from the city, develops the project and then sells the property to an investor.
The city receives 10% of the profit proceeds for industrial space and it will be 50% for mixed-use development.
No mixed-use deal has been done.
As for sales, among them Hillwood sold both of the million-square-foot completed structures.
Gramercy Property Trust Inc. of New York bought the completed Amazon.com fulfillment center for almost $95.5 million in February 2018.
Stockbridge Capital Group LLC of San Francisco acquired the Wayfair Inc. fulfillment center for almost $75.5 million in July 2020.
