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Duke-Weeks falls into the Gap

COLUMBUS, Ohio - Flipping through the pages of NREI this month, it's hard to miss the fact that Indianapolis-based Duke-Weeks Realty Corp. continues development and lease-up in the South and Midwest at an astounding pace. In Columbus, Ohio, Duke-Weeks has landed one of the biggest industrial development deals the Buckeye State's ever seen.

In Duke-Weeks' Groveport Commerce Center in Franklin County, San Francisco-based clothing retailer Gap Inc. has leased a 425,000 sq. ft. order fulfillment center and acquired 96 acres for the future development of an 830,000 sq. ft. facility. The 425,000 sq. ft. building will be operational this summer, while the larger structure will be shipping orders by summer 2001. The project totals $130 million in new development, and is Gap's first distribution facility transaction with Duke-Weeks. With the new Gap project, Duke-Weeks is approximately two years ahead of schedule on Groveport Commerce Center development, according to Kurt Dehner, senior vice president of the company's Columbus Group.

Duke-Weeks and Gap first discussed the Columbus project in October 1998, and the deal really began to take form last Thanksgiving, says Dehner. When Gap had questions, Duke-Weeks was able to provide detailed answers quickly, he says.

"That helped their facilities people feel very comfortable that we could deliver the type of product that we promised," says Dehner. "And we were able to provide this with all the assurances that they could stand there and look over our shoulder and see that this is something we could do and start tomorrow if they wanted us to."

The Gap already leases a 270,000 sq. ft. building near Groveport, and that facility will remain operational. The new developments will further Gap's e-commerce order fulfillment capability for its Gap, Old Navy Clothing Co., and Banana Republic brands and the Banana Republic Catalog.

To sweeten the deal, Ohio reportedly offered a number of tax incentives including: a 15-year, 100% property tax abatement because the project is in the Groveport Community Reinvestment Area; $2 million in grants provided to Groveport for public roads and storm-water drainage; up to $1.2 million in training grants; and a 10-year, 75% Job Creation Tax Credit. Upon completion of the new development, the Gap will employ 2,650 full-time workers and 400 part-time workers.

"Those kinds of incentives are an absolute requirement for any state or local government to lure a project of this size," says Dehner. "If you don't have that in today's world, you don't get a chance to see the deal."

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