Ex-Winn Dixie complex sold

Warehouses snagged as demand jumps

CLAYTON -- A cluster of former Winn-Dixie warehouses fetched big bucks in a sale to an out-of-state investor Wednesday.

Crown West Realty of Spokane Valley, Wash., paid $61.25 million for the 1.15-million-square-foot Carolinas Distribution Center at 833 Shotwell Road. The price, about $53 per square foot, was 61 percent more than Charlotte-based seller Fulcra Enterprises paid less than two years ago.

It's the latest deal to illustrate how the region's industrial property market has gained favor with investors after being beaten down by the busted tech sector in the early 2000s.

Continued population growth in the Southeast has brought an influx of distributors and manufacturers to the region. Triangle warehouses are more full than they have been in seven years. Tenants are scrambling for space, and landlords are raising rents. A lack of development has pushed the Triangle's warehouse vacancy rate down to 8.8 percent, a seven-year low, from 17 percent in March 2006.

"We want to ride the rising tide," said Ed Gargiulo, a Crown West asset manager.

As part of the deal, the company bought enough land to build as much as 500,000 square feet of warehouse space.

"It's a great platform to launch an industrial portfolio in that part of the country," Gargiulo said.

The hope of a bright future follows several dark years at the Clayton facility, which is almost equidistant from Interstates 95 and 40.

Built for Winn-Dixie in 1997, the portfolio was abandoned seven years later when the Jacksonville, Fla., grocer went bankrupt. It sat empty for about a year until Smithfield Foods, the meat processor, decided to lease about 30 percent of the space.

The property is now 98 percent leased, with tenants including Smithfield Foods, Hallmark Cards, Kuehne & Nagel and HBI Priority Freight, said Chris Norvell, a Colliers Pinkard broker in Raleigh who represented the seller.

Demand for that space, and other warehouses in the region, is in part why investors have been willing to pay big premiums in the Triangle this year.

In June, Grosvenor Investment Management paid $105.5 million for 1.5 million square feet of warehouses and offices at Durham's Research Tri-Center. That was about twice what Chicago-based seller Transwestern Investment paid two years ago.

That same month, Macfarlan Capital Partners of Dallas paid $20 million for 900 Aviation Parkway in Morrisville -- more than twice what seller RDU Property Investments paid in 2005 for the the 580,000-square-foot warehouse, one of the region's biggest.

The deals are part of at least $230 million in Triangle industrial sales this year. The total is more than twice the annual average over the previous 10 years, CB Richard Ellis data show.