Amazon project dominates third quarter for Hillwood

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Hillwood Investment Properties’ third-quarter report filed Thursday didn’t identify the prospect, but its primary activity clearly was

As the city’s master developer of the Cecil Commerce Center business park, Fort Worth-based Hillwood files quarterly reports with the Office of Economic Development.

For July-September, Hillwood said it continued the due diligence and design work that had begun the prior quarter for a 1 million-square-foot distribution center, on a portion of Parcel C.

By the end of the quarter on Sept. 30, there was a strong citywide expectation it was a second fulfillment center.

That’s because, among other factors, legislation was introduced to City Council in September for Project Velo, which closely matched the specs of the first center under development in Northwest Jacksonville.

After the quarter ended, a building-permit application identified the Cecil project in West Jacksonville as an sortation center. The contractor has been clearing the 86-acre site at 13333 103rd St. was expected to announce the project by year-end, but it appears that might wait until early January.

The Seattle-based internet retailer often builds several centers in one area to handle a spectrum of functions.

The Northwest center will pick, pack and ship small consumer items while the Westside facility will handle large goods.

The second major project at Hillwood’s AllianceFlorida at Cecil Commerce Center was a speculative warehouse building on Parcel D.

In August, Hillwood submitted plans to the city for the proposed 407,435-square-foot warehouse that Senior Vice President Dan Tatsch said in July would be completed by mid-September 2017.

During the third quarter, Hillwood took several steps toward its development, including submitting the 10-set permit drawings to the city and releasing its architect to create building permit drawings.

That project is at 4660 New World Ave.

The city issued a site-clearing permit in November. Hillwood bought the property, 35.43 acres, from the city this month.

“E-commerce sales continue to grow and that growth translates into more opportunities for industrial property,” Tatsch said Thursday.

He said Hillwood’s construction start on the speculative building is “a tangible statement of our confidence in the Jacksonville market.”

GE Oil & Gas leased Hillwood’s first speculative building.

Hillwood also dealt with several other large projects in the third quarter.

According to the report, the company:

• Received word that a prospective tenant that had been seeking 200,000 square feet of distribution space to support an e-commerce operation had elected to lease about 70,000 square feet in another location, but did not say where. Tatsch said that prospect was not, although coincidentally a permit application was filed in November for it to build-out a 63,000-square-foot delivery station in North Jacksonville at Alta Lakes Commerce Center.

• Continued discussions with a prospective tenant seeking 1 million square feet of distribution space. Tatsch did not comment beyond the report when asked if that was Velo or another company.

• Received and responded to initial inquiries from two prospects, one seeking 200,000 to 400,000 square feet of distribution space and another wanting 300,000 to 400,000 square feet.

• Learned from a broker that a prospect seeking 400,000 square feet of distribution space decided to delay its search until late 2017 or early 2018.

Tatsch said the U.S. industrial property sector has had a strong run since the Great Recession of 2007-09, “and I don’t see that changing during 2017.”

He said Jacksonville’s industrial vacancy rates are at their lowest level since the recession and rental rates continue to rise.

Cecil Commerce Center is along Cecil Commerce Center Parkway and Normandy Boulevard, south of Interstate 10.

In 2010, Hillwood began a 25-year contract to develop 31 million square feet of industrial and retail space at the city-owned 4,475-acre property.

Hillwood must complete at least 1.2 million square feet of new building area by Sept. 15, 2017, according to the city.

City spokeswoman Tia Ford said previously Hillwood has a little more than 800,000 square feet of new development at the park. The spec building would meet the 2017 requirement.

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