The Mathis Report: Hillwood courts distribution centers, including a million-square-foot prospect.
Hillwood reported Friday that near the end of the first quarter in March, a broker asked about sites for a 1 million-square-foot distribution facility at Cecil Commerce Center.
Dallas-based Hillwood is the master developer for the city at AllianceFlorida at Cecil Commerce Center in West Jacksonville.
Hillwood Senior Vice President Dan Tatsch said Friday he couldn’t offer details, but the prospect remains active at the park.
“The deal is still alive. We and others are still chasing it,” he said of Jacksonville developers.
“I know the prospect is paying serious attention to Jacksonville. Whether or not they are paying serious attention to another city, I don’t know,” Tatsch said.
The report also shows that Hillwood delivered a $1.37 million payment for the city’s share of profits as outlined in the 2010 Master Disposition and Development Agreement.
Tatsch said the agreement calls for the city to share in Hillwood’s profits.
The city receives 10 percent for industrial space, such as that for the first quarter, and it will be 50 percent for mixed-use development.
“As of the first quarter, there was a profit,” Tatsch said.
He said it was the second time Hillwood delivered a profit-sharing check. He said the first was $1.5 million after Hillwood sold the speculative building leased by GE Oil & Gas.
“It means the project is working. It means the park is working. It means the deal with the city is working,” he said.
Tatsch said the checks quantify the success of the concept. “When those checks happen, it means we are all doing something right.”
The Master Disposition and Development Agreement between the city and Hillwood was effective Sept. 15, 2010, with an initial term of 10 years.
Hillwood is required to meet benchmarks, but extended those twice, at a cost of $500,000 each time, during the recessionary economy.
Tatsch said that by the end of the initial term for mid-September 2020, Hillwood is required to deliver at least 2 million square feet of space.
That means Hillwood met 10 years of performance goals in five years. “That is another strong statement about how good the economy is doing in general,” he said.
“After a slow start, things are really looking good.”
Hillwood has delivered more than 2.2 million square feet, he said, exceeding the benchmark two years ahead of the deadline.
By the end of the first quarter, Hillwood said, it developed and delivered buildings for General Electric, Amazon and JinkoSolar and sold a tract to FedEx Ground Package System for its facility.
The report said Hillwood will actively pursue additional development during the remaining two years of the agreement.
Tatsch said he expects to start talking with the city soon about the deal. “It is my hope that we will renew the contract,” he said.
City spokeswoman Tia Ford said Friday the partnership with Hillwood has supported the city’s efforts to redevelop Cecil Commerce Center, a former Naval Air Station.
She said the initial term of the agreement is 10 years. If Hillwood meets predetermined performance benchmarks, it can extend the agreement for three additional five-year periods.
“At this point, they have reached the performance benchmarks to extend the first five-year period,” Ford said.
As the city’s master developer at Cecil Commerce Center, Hillwood must file quarterly activity reports with the city. For the January-March period, Hillwood said it:
• Executed a long-term lease with JinkoSolar for 285,652 square feet of space in a speculative building at 4660 New World Ave.
• Received and responded to an inquiry from an individual interested in buying that speculative building and about 28 acres.• Received and responded to a broker representing a prospect seeking to lease 300,000 to 500,000 square feet of distribution space.
• Received an inquiry from a broker about a prospect interested in leasing about 125,000 square feet remaining at 4660 New World Ave. Jacksonville-based Industry West, an e-commerce furniture, confirmed in June it will lease that space.
• Hosted a site visit by a prospect interested in leasing about 400,000 square feet of distribution space, which is a potential build-to-suit facility.
• Hosted a site visit by a prospect interested in leasing about 125,000 square feet of distribution space. The prospect’s operations are in Atlanta and it is considering relocating part of those to Jacksonville.
• Hosted a site visit to the speculative building for a prospect interested in leasing about 200,000 square feet of distribution and assembly space. The prospect decided the operation needs to be closer to Mayport.
Hillwood also reported its development activities during the quarter.
It sold the Amazon facility in January to Gramercy Property Trust for almost $95.5 million. Hillwood bought the Cecil property from the city in January 2017 for $783,341 and developed the 1 million-square-foot Amazon fulfillment center at 13333 103rd St.
In the early March, JinkoSolar signed a lease for more than half of a 407,000-square-foot speculative building completed in late 2017.