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With Amazon as Tenant, Durham Warehouse Doubles Value in 2.5 Years

A Florida real estate investment partnership has pulled a repeat trick, cashing in big returns on a warehouse complex in Durham after signing Amazon as a tenant.

A joint venture between Tampa-based Meridian Development Group and Texas-based Thackeray Partners has sold the sprawling North 70 Distributor Center for $16.025 million, less than three years after purchasing the complex for $7.3 million.

Meridian was able to get similar returns on the North 540 Distribution Center in 2016, which it bought two years earlier for $8.2 million and then sold for $16 million.

To pull off the latest deal, the group landed Amazon as a tenant. After the partnership bought North 70 Distribution Center, the group pumped money into an exterior facelift of the property. At the time of the sale, the 262,000-square-foot warehouse was occupied by a single tenant — West Brother’s Transportation Services Inc. But the company downsized its space, moving out of 100,000 square feet, providing the new owners with an opportunity to renovate a chunk of the building.

Amazon signed on for the remainder of the space, setting up a new last-mile delivery warehouse operation. Meridian Development Group Managing Director Steven Kossoff described it as a conveyor and rack system that move packages to workers who load the goods into vans.

The buyer of the property, located at 224 N. Hoover Rd. in east Durham, is NorthBridge Partners, a real estate investment firm based in Massachusetts.

The sale comes at a time that the industrial and flex space market in the Triangle is tight, with low vacancies and high demand driving up prices. In 2018, the vacancy rate was at a "historically low" 7 percent, according to NAI Carolantic.

Kossoff described the returns on the North 70 Distributor Center as “slightly better” than normal. In the Triangle and beyond, Kossoff and his colleagues are seeing peek prices for real estate. As financial markets remain volatile, more investment is being pumped into real estate, a market perceived as more stable, he says.

The heated state of the real estate market can make it more difficult to find deals. Kossoff says his firm likes to stay disciplined in hot markets, but is still able to work with brokers to find “hidden gems.”

His firm remains bullish on the Triangle and invests in one or two projects in the region each year. “It’s a young population, a growing economy, great government to work with in the community,” he says. “We will continue investing in that market going forward.”
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