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Deal of the week: Pennsylvania office furniture distributor inks Texas-sized industrial lease

Crow Holdings Industrial has landed a new-to-Texas tenant at its recently completed redevelopment of the former Randalls grocery regional distribution center in northwest Houston.

JMJS, a nationwide wholesale distributor of office furniture operating as COE Distributing, signed a long-term lease for 251,754 square feet at 10620 Telge Road in Highland Grove Industrial Park.

Based in the Pittsburgh area, the third-generation family-owned company now has distribution centers in Pennsylvania, North Carolina and Texas. The company also sells products under its OfficeSource brand.

“While seeking to expand in the Texas region, Houston made perfect sense to us for many reasons,” COE Distributing CEO J.D. Ewing said in an announcement. “We have a customer concentration, it’s a major port city and a strong workforce experienced in distribution. We are excited to strengthen our presence in Texas.”

Colliers International’s John Parsley, Barrett Gibson and Jason English represented COE Distributing in the transaction. Cory Driskill and Travis Covington of Crow Holdings Industrial and Faron Wiley of CBRE represented the landlord, CRP/CHI Randalls Owner, an affiliate of Crow Holdings Industrial.

Proximity to Port Houston gave Houston a competitive edge over other Texas cities in the site selection process, according to Colliers.

“Our search began with over 30 properties, and our client chose this site in Houston because it is in a strategic location for distributing to the key Texas markets: Austin, San Antonio and Dallas,” Gibson, a principal at Colliers, said. “Along with those key markets, COE Distributing and OfficeSource bring in products from all over the U.S., Malaysia, Vietnam, etc., which makes the location near the Port of Houston an ideal location for them.”

The Houston area’s industrial vacancy rate increased to 6.3 percent in the second quarter, up from 5.3 percent in the second quarter 2018, as more space has been added to the market, according to Colliers. The vacancy rate in the northwest Houston submarket, where 1.5 million square feet of the Houston area’s 13.5 million square feet of space is under construction, is 7.5 percent.

Needing a facility in excess of 200,000 square feet narrowed down the options, because much of the space under construction across the Houston market is already spoken for, Parsley said.

Cory Driskill, managing director with Crow Industrial Holdings, said factors contributing to the decision to invest in Highland Grove Industrial Park included its visibility off of U.S. 290 and location between Beltway 8 and the Grand Parkway. The location provides access to labor, population centers and other parts of the state such as Austin, San Antonio and Dallas-Fort Worth.

Crow Holdings Industrial purchased Randalls’ 700,000-square-foot building on 70 acres just south of U.S. 290 in early 2018 after the grocer consolidated its distribution operations to Dallas. Built in the mid-1980s, the building had been expanded multiple times over the years and included 230,000 square feet of cold storage space.

As part of the redevelopment plan, the building was split in two to create a freestanding cold storage and freezer storage facility and a separate distribution building with driveway and parking area in between. The middle portion of the building was removed, enabling Crow Holdings to create a cross-dock building to handle in-bound products on one side and out-bound products on the other. Three additional buildings, totaling 460,000 square feet, were added to the site, bringing the entire park to nearly 1.1 million square feet in five buildings.

“We repurposed the building to make it more flexible and functional for today’s tenants,” Driskill said of the former Randalls building.

The COE Distributing lease is the second to be signed in Highland Grove Industrial Park, according to Driskill. PCA, a packaging products company, leased 89,000 square feet in building four. About 750,000 square feet remains available for lease at the park, which was completed in June.

Elsewhere in Houston, Dallas-based Crow Holdings Industrial is developing Lane Crossing, a 560,000-square-foot project at Interstate 45 and Beltway 8 in north Houston, and Victory Commerce Center, 350,000-square-foot building in Deer Park.