Left to right: Ben Eisenberg, senior managing director for Transwestern and Chris Sutton, vice president of development for Flagler Global Logistics. ()
PriceSmart Inc. has purchased a newly built piece of Flagler Station, a multiphase industrial development near Medley.
The U.S. warehouse chain is a leading operator of membership warehouse clubs in Central America and the Caribbean, and is a long-time tenant at the 1,000-acre corporate park. PriceSmart has expanded from an initial 70,000 square feet to over 400,000 square feet today at Flagler Station, where the company has operated for more than a decade.
Ben Eisenberg, a senior managing director with Transwestern, has been working for years to meet PriceSmart’s industrial real estate needs.
The company approached Eisenberg and his Miami-based team about 1½ years ago about expanding its distribution space.
As the company built new stores throughout the Caribbean and Latin America, its operations expanded, Eisenberg said. PriceSmart leases about 360,000 square feet of space spread between two facilities in the business park’s second build-out, known as Flagler Station Phase II.
“It got to the point where they needed to be more efficient with their distribution space,” he said.
But the company’s operations produce an abnormal amount of truck activity compared with other industrial users. Its new facility had to have “many doors” and “as much trailer parking as we could find,” Eisenberg said.
A standard warehouse wouldn’t fit the bill. So why not build a new one?
Eisenberg connected with Chris Sutton, vice president of development for Flagler Global Logistics, the company that built Flagler Station, to discuss the possibility of building a new facility for his client in the third phase of the park.
The developer’s original master plan called for construction of three buildings in the park’s third and final phase. But to accommodate the facility PriceSmart wanted, the plan would have to shrink to two rather than three facilities.
“The timing was very good because we hadn’t started construction on those three buildings,” Sutton said. “It provided us an opportunity to … meet the needs of PriceSmart so we could accommodate their growth.”
A build-to-suit agreement was struck: Flagler Global Logistics agreed to develop a 330,000-square-foot facility for PriceSmart by last month. The second warehouse would be built on spec.
PriceSmart purchased the newly completed distribution center at the end of January for $45.56 million, or $141 per square foot. Sutton and Daniel Marcus, executive vice president of real estate development, represented Flagler Global Logistics in the transaction. Eisenberg and his team represented PriceSmart.
PriceSmart designed the center with 32-foot clear heights, additional spots for 102 trailers and 30,000 square feet of office space. The Flagler development team worked with PriceSmart’s in-house construction group to build the facility.
The company will keep about 100,000 square feet of space in one of its current buildings, where it will continue to operate a recently expanded refrigerated and frozen distribution facility. The company will move its corporate office and distribution center for dry goods to the new facility, subsequently leaving about 260,000 square feet of space vacant at Flagler Station Phase II.
The move is planned for March and will expand the company’s footprint within the massive complex by nearly 20 percent.
“PriceSmart has grown organically within Flagler Station over its second decade in the park,” Sutton said, adding the company is now considered the park’s anchor tenant.
“One of our company’s main objectives is to be very flexible and be able to accommodate the unique needs of companies like PriceSmart,” he added.
Eisenberg and Sutton will now compete with one another to attract new tenants at Flagler Station. Transwestern has been tapped to sublease the soon-to-be available 260,000 square feet that PriceSmart will leave behind, while Sutton continues to lease up the spec facility built as part of the third phase.
“Since demand for industrial space in the Medley submarket has continued on an upward trend for the past 11 quarters, pushing the submarket’s vacancy to 3.6 percent, we are seeing strong interest for large blocks of space,” Eisenberg said.
At times the two are competing for the same tenant, but the abundance of tenants in the market has led to significant leasing activity for both, he added.
Transwestern’s senior managing director Walter Byrd, senior vice president Thomas Kresse and senior associate Carlos Gaviria also worked on the deal.