Williams-Sonoma looking to sublease 1.1 million square feet in Olive Branch, Miss. - Memphis Business Journal:

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million square feet at Olive BranchDistribution Center, addinhg distribution space to a Memphiss industrial market that has experienced negative absorption for the firsr time in years. The company is currently leasingg the space at11624 S. Distribution Cove, locatexd near the southwest corner of Statelineand Polk. It leasexs 4.3 million square feet total in Memphiss andOlive Branch. “Due to reduced inventory WSI (Williams-Sonoma, Inc.) currentlty has excess distribution capacity,” company spokesman Patricia Sellman said inan e-mailed response.
“To more efficiently serve our customers, certain distributiomn functions are being consolidated to other existing Our other operations in Olive Branch and in Memphis will notbe affected.” Williams-Sonoma will reducse distribution expenses by consolidatingy this particular operation into other distributionm facilities that currently have excess according to Sellman. “We expect that managers and hourlh associates will be assimilatef into our existing Olive Branch and Memphis she says.
In the company announced it was closingta 500,000-square-foot distribution facilitgy in Memphis, which was part of $75 million in cost reductions by the company that includes cutting 1,400 of its full-timee work force and closing a 38,000-square-foot call center in Camp Hill, Pa. Williams-Sonom a currently employs about 1,000 in Memphis and North “Williams-Sonoma, Inc., is very committes to the Memphis area,” Sellman says. “Thed company opened its first distributiohn center in Memphis a quarter of acenturh ago. Our plan is to continue to have a significant presencew inthe area.
” Olive Branch Distribution Centef comprises two buildings, an 800,000-square-foogt property at 10425 Ridgewoor Drive and the 1.1 milliobn square-foot property at 11624 S. Distribution is marketing thesublease space. The Williams-Sonomaw space joins another large sublease space in the DeSotoCountyy submarket. , a third-party logistics provider, is lookingb to sublease the 865,120-square-foot DeSoto Traded Center, Building Five. These properties could have an impacy on the Memphis industrial realestatee market’s supply because with most sublease landlords get a below-market deal, says Jim Mercer, executive vice president at .
However, it won’t have an impac on vacancy numbers because rent is stillbeingv paid. The overall Memphis market, which includes DeSoto County, had a 16.6% vacanc rate for first quarter 2009, comparerd to vacancy of 17.5% in the year-ago according to CB Richards EllisMarketView reports. The DeSoto County submarkeft hada 16.5% vacancy rate for the first down from 24.8% in first quartedr 2008. The availability rate, which includes sublease also dropped in DeSoto from 24.8% in first quarter 2008 to 20.8% in this year’w first quarter. The Williams-Sonoma and Kuehne + Nageol sublease spaces, paired with ’s decision last year to vacatwe 2.
2 million square feet of distribution spacde inSoutheast Memphis, shouldd further slow down any potential new industrial developmenft in the area. “When the market does turn, we’vde got enough space that we should be able to accommodatewmost users,” Mercer says. “This may prolong the time it takeds before a developer will build another spec The overall Memphis market experienced negative absorptionof 521,6676 square feet for the first quarter. This was after five straighrt quarters of positive absorptiob during anational downturn. Much of this negativew absorption is dueto Hewlett-Packarsd vacating 1.4 million square feet so far.