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If America learned anything from a pandemic economy, it’s that inventory and transportation are key to delivering retail goods to the modern consumer, especially if that consumer can only shop online. A modern business that manufactures a retail product relies on warehouse space and connected
routes now more than ever to make sure that order shows up on the customer’s doorstep. By securing more than half a million square feet of warehouse property, SCOA’s Commercial Real Estate Unit closed on two industrial land sites in the greater Dallas-Fort-Worth, Texas market this past summer that serve as its first foray into the industrial real estate sector.
By entering into joint venture agreements with two partners - Velocis, a Dallas-based fund manager, and KBC Advisors, a national developer of industrial facilities -- SCOA purchased the DeSoto Texas site in late May and the Mansfield Texas site in late June. These two investments serve as the company’s first developments in the industrial/logistics property sector, a highly competitive sector that aligns with SCOA’s goal of portfolio diversification. Joe Zagranski, Vice President and Deputy General Manager of SCOA’s Materials, Supplies and Real Estate Group, believes that the world is heading in a direction that makes these purchases the best move at present.
“We feel that these investments will benefit from the continuing trends of e-commerce and globalization of trade,” Zagranski said, “as well as providing corporate supply chain solutions to the issues that became apparent during the global pandemic. We are also planning to sell both buildings shortly after construction completion following a similar strategy in our residential multifamily apartment development business.
“Essentially, our unit’s near-term goal was to diversify our U.S. real estate portfolio and investing in industrial development projects helps us to achieve this goal. The demand fundamentals are strong from the growing trends of globalization and e-commerce and/or online shopping, which was magnified by the global pandemic that hit in March 2020.”
Manabu “Matt” Hamamoto, General Manager of SCOA Materials, Supplies & Real Estate Group, sees the move as part of a shift in strategy.
“For many years, our business group’s basic strategy has been to invest in residential development projects and existing large office buildings located in central business districts with the 20th largest population in the U.S.,” Hamamoto explained, “but, in the spring of 2020, we reviewed and revised our strategy, which involved diversifying our investment targets in order to ensure business stability and continuous growth. In addition to large office buildings in CBDs, we look to invest in suburban offices, and enter new real estate areas.”
Desoto broke ground on the development in late September and the building should be completed by May 2022, with the Mansfield project likely to break ground soon, and likely completed by July 2022.
“The demand for industrial real estate, especially in Texas metro areas like Dallas–Fort Worth, is at an all-time high right now,” said Paul Smith, Velocis partner. “We consider these first two transactions to be the first of many industrial investments with SCOA, as we continue to evaluate opportunities locally and on a national level.”
With modern consumers expecting next-day or same day shipping for almost all goods, warehouse operators and/or distribution centers are seeking more space closer to population centers. Coupled with the data that Dallas/Fort-Worth is one of the fastest growing metros in the United States, acquiring and/or establishing warehouse options serves the future needs of the area’s business.
The DeSoto Project, on an 18-acre site, is located proximate to the perpendicular intersection of two major highways, and can be accessed by a 15-minute drive to downtown Dallas. This site will be suitable for tenants that need proximity to the metropolitan area’s dense population.
A 351,000 square foot front-load industrial facility is being developed with modern, Class A features including 36’ clear height and 54’ by 50’ column spacing within the warehouse, 70’ loading bays, 185’ truck courts, 62 dock-high loading doors, 69 trailer spaces, 179 car spaces, ESRF sprinkler system and multiple ingress/egress points.
The Mansfield project, on a 33-acre site, is located at the intersection of Heritage Parkway and Main Street/local Highway 157 and is one mile from US-287 and 2.5 miles from Texas 360, providing access north to Fort Worth and Arlington, and Interstate 20 which provides east/west access. The site is a 20 minute drive to downtown Fort Worth and 35 minutes to downtown Dallas. Two industrial buildings will be developed on this site totaling 501,660 square feet.
The first building will be a 317,000 square foot cross-dock building featuring 36’ clear height and 54’ by 50’ column spacing, 60’ loading bays, 74 dock-high doors, 60 trailer parking spaces, 205 car parking spaces, and ESFR sprinklers. The second building will be a 187,000 square-foot front-load building featuring 32’ clear height, 54’ by 50’ column spacing, 60’ loading bays, 29 dock-high doors, 22 trailer spaces, 168 car parking spaces, and ESFR.
With SCOA’s Real Estate Unit currently analyzing another possible industrial development for their next project in Texas, this looks like just the beginning for SCOA in the industrial real estate sector.
“In the U.S. real estate investment market, logistics real estate is growing at a rapid pace,” Hamamoto added, “rivaling residential and office real estate, which have been considered the core of the market. One of our major goals was to capture the growth of the logistics real estate market. However, investing in logistics real estate is an area that many investors are focusing on, and competition for investment opportunities is said to be very tough. In such an investment environment, it is very meaningful that we were able to realize this investment through the teamwork of our existing network and a professional with expertise in the logistics real estate industry, and we hope to further expand this business.”
Above: Groundbreaking for Centre Park 20/35 – 1500 N. Polk Street, DeSoto, TX
Left to right: SCOA Real Estate Unit representatives Joe Zagranski, Deputy General Manager; Takayuki “Frank” Fukumoto, Senior Manager; Kentaro “Kenny” Yano, Unit Head, Commercial Real Estate; Robert Obringer, Unit Head, Business Development; Andrew MacDonald, Manager