HPI sells business park; Arrive Logistics, Afia Foods show how tenant demand is driving market

Investor interest and tenant demand continue to drive heightened activity in what is arguably the Austin area’s strongest real estate asset class: industrial.

Already this month a nearly 400,000-square-foot industrial business park has changed hands and a pair of companies announced significant expansions in industrial space, including a roughly 21,000-square-foot lease in Taylor that will serve as a springboard for a food manufacturer’s national expansion.

NAI Partners’ most recent market snapshot of the Austin-area industrial sector, released Sept. 17, showed demand for industrial space far outpaced supply during the first eight months of 2021. Demand was at 4 million square feet between January and August, compared to a supply of 1.2 million square feet.

About 2.3 million square feet of industrial space was delivered since January, with another 14 million square feet under construction, according to NAI. Amazon.com Inc. and Tesla Inc. are responsible for 9 million square feet of that new development, with a huge warehouse for the e-commerce behemoth nearly finished in Pflugerville and an electric vehicle factory rising in eastern Travis County.

Another 6 million square feet of industrial development is planned through 2022, much of which is expected to be e-commerce distribution space to keep up with consumer demand and a ballooning population.

Leasing volume is also up, according to NAI. Year-to-date volume of signed leases hit an all-time record of 7.8 million square feet — up 5.9 million square feet year over year.

Some of the largest leases of 2021 include Amazon taking 767,600 square feet at 1356 Fortuna Road in Hays County, with delivery expected in December, and Simwon’s 491,651-square-foot lease at Plum Creek Industrial Center, which delivers in January 2022.

Below are details on the three large deals from earlier this month.

Fully leased industrial park sells

Harris Ridge Business Center — a five-building, 387,838-square-foot industrial park in North Austin — has a new owner, CBRE Group Inc. announced Sept. 14.

Boston-based TA Realty LLC purchased Harris Ridge from Austin-based HPI Real Estate Services Inc. The sale price was not disclosed. The industrial park is 100% leased to 11 tenants. The average suite size is 32,392 per square feet.

The deal closed Sept. 9, according to CBRE.

Harris Ridge, located at 1100 E. Howard Lane, is less than 2 miles from I-35 and close to The Domain.

CBRE’s 2021 Americas Investor Intentions Survey found Austin is one of the top markets in the Americas for commercial real estate investors.

The survey found 36% of investors preferred to put money into industrial and logistics development. Apartment developments ranked second in the survey (29%), followed by office (14%), hotel (11%) and retail space (10%).

Jonathan Bryan, one of CBRE’s brokers on the deal, added the North Austin submarket is so attractive for investors because of the area’s population growth and access to abundant labor. There are also substantially large tech users who have offices in the area.

The first building of the industrial business park came online in 2008, with the fifth and final building delivering earlier this year.

CBRE’s Bryan, Randy Baird, Ryan Thornton and Eliza Bachhuber represented HPI and arranged the transaction.

Falafel maker to relocate

A Mediterranean food company will be moving into a build-to-suit industrial manufacturing space.

Austin-based Afia LLC has leased 20,649 square feet in Taylor. Afia Foods is expected to move into the space in early 2022, leaving a smaller site it has been operating out of in Jarrell.

Sun-dried Tomato Falafel, Afia’s sixth branded product, launched in August. Afia also that month added a few new retailers: Bristol Farms, Mother’s Market and Natural Grocers. Afia is also available through Amazon, Farmhouse Delivery, H-E-B, Sunbasket and Walmart.

Afia was founded in 2017 by Farrah Moussallati Sibai, who is of Syrian and British descent and the company’s president. She and her husband, Yassin Sibai, fled Syria in 2014 and eventually made their way to Austin, where they created Afia. The Sibais use recipes from Yassin Sibai’s mother to create the foods distributed by Afia, including kibbeh, falafel, shawarma and gyros.

Yassin Sibai said the new facility, at 270 BFG 9000 Way north of U.S. Route 79, will help Afia grow as a national brand.

“The new facility, it’s a brand-new production line that is fully automated. We can do 10x of our current productivity,” said Yassin Sibai, who is Afia’s CEO. “It would also allow us to be able to create additional product lines.”

Afia achieved $1 million in sales within two years after signing its first retail partnership with San Antonio-based H-E-B LP. Afia also increased its distribution 340% year over year in 2021.

“My wife had the vision, my mom had the recipes. They came together and they kind of presented this opportunity,” Yassin Sibai said.

“There were a lot of obstacles along the way,” he later continued. “We did not come from the food industry. We had to learn a lot about the industry — how things worked, who the players are, and everything in between. We had to learn it all. It was a challenge.”

NAI Partners’ Troy Martin represented Afia in the transaction. Darren Quick with Don Quick & Associates represented the landlord.

“Afia’s story is remarkable — from a kitchen in Syria, to a farmer’s market in Austin, and now to stores across the nation, the company has been about infusing the meals of its past with modern flavors and nourishing the Austin community every step of the way,” Martin said in a statement.

Arrive Logistics eats up more space

Austin-based Arrive Logistics Inc. has expanded and extended its lease with landlord Mohr Capital in MetCenter Business Park, a 550-acre business park near Austin-Bergstrom International Airport, it was announced on Sept. 14.

Arrive, a freight brokerage that has seen its headcount and revenue surge in recent years, signed a 116,000-square-foot lease in MetCenter’s Building 15, which is 38,000 square feet larger than the 78,000-square-foot flex space the freight brokerage previously had at buildings 14 and 15.

Arrive had more than 850 employees working at buildings 14 and 15. The freight brokerage plans to hire another 1,000 employees within the next 12 months, according to an Arrive spokesperson.

The company recorded revenue of nearly $811 million in 2020, according to Austin Business Journal list research.

The lease expansion and extension will run through December 2031.

“The trend in tech and logistics companies seeking flex office/industrial space outside of Austin’s urban core has only continued to grow,” Rodrigo Godoi, managing director of investments for Mohr Capital, said in a statement. “Arrive Logistics is a perfect example of a credit tenant on the cutting edge of its real estate strategy. We’re pleased to have worked with the company to negotiate its lease expansion and long-term occupancy in one of Austin’s most desirable mixed-use business parks.”

In 2019, Dallas-based Mohr Capital acquired five buildings encompassing 404,800 square feet in MetCenter from Zydeco Development. Mohr sold one of those buildings, occupied by Amazon, in May.

 

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