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12/03/25
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BKM Capital Partners acquired a three-property, 200.3k sf industrial portfolio in Dallas-Ft. Worth and Houston for $27.5 mil ($137/sf). The purchase was made on behalf of BKM Industrial Value Fund III.
Kinghurst Business Center, Houston, TX |
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“The industrial sector may be absorbing new supply, but with almost 99% of the DFW and Houston pipeline dedicated to large facilities, none of it is built for the sub-10k sf user,” said Brett Turner, Senior Managing Director of Acquisitions and Dispositions at BKM. “This portfolio fills that void with proven product in submarkets where shallow-bay assets have outperformed the market for over a decade.”
The portfolio, acquired at a 43% discount to replacement cost, consists of 67 units across 11 buildings strategically positioned in high-growth submarkets of Dallas-Ft. Worth and Houston. The properties include:
• Great Southwest Business Park (formerly GSW Circle), featuring 73.6k sf across 30 units in five buildings in North Dallas’ South Stemmons submarket
• Royal 35 Business Park (formerly Plaza Circle), four buildings totaling 24 units and 68k sf in DFW’s Great Southwest submarket
• Kinghurst Business Center (formerly Kinghurst Circle), 13 units in two buildings totaling 58.7k sf in Houston’s Southwest Corridor
The properties are 98% leased to a diverse array of tenants and feature 14- to 18-foot clear heights with an average unit size of just under 3k sf. Originally constructed between 1981 and 1986, the assets offer modern functional layouts and 87 loading doors in a mix of configurations tailored to the needs of small to midsize users.
As part of its value-add approach, BKM will implement a $2.1 mil capital improvement plan focused on enhancing exterior façades, roofs, HVAC systems, signage, landscaping, and targeted interior buildouts. The firm intends to leverage the properties’ weighted average lease term of just two years to capture a 26% mark-to-market opportunity in rents.
Since 2020, Texas has accounted for nearly 22% of net absorption in the U.S., with DFW and Houston each absorbing over 20 msf of industrial space last year alone. The sub-100k sf segment continues to outperform bulk product; vacancy for vintage shallow-bay assets has been trending below 5% since 2012.
Drilling deeper, shallow-bay rents in DFW’s South Stemmons and the Great Southwest submarkets have increased more than 25% since 2021, while light industrial product in Houston’s Southwest Corridor has enjoyed 27% rent growth over the same period.
The seller, Circle Industrial, was represented in the transaction by the JLL Capital Markets team. Brett Turner, with support from Charlie Farmer, BKM’s Director of Acquisitions and Dispositions, led negotiations on behalf of the firm.
This acquisition brings BKM’s Texas footprint to more than 1.2 msf, reflecting its continued conviction in the fundamentals driving small-bay industrial performance across Texas. The firm is particularly bullish on the Texas Triangle, a dynamic area connecting the 25 million-plus residents of Houston, DFW, Austin, and San Antonio.
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