The building is the second DVD distribution center for Technicolor in Memphis and the company expects it to be fully operational by February 2004. Technicolor has already moved into the first building, a 922,500-square-foot building also in Memphis Oaks, and 450 employees have been hired.

Thomson spokesman Dana Banks says both buildings house packaging operations. The first building at 4155 Holmes is used to package new releases, while operations in the second building will primarily package older DVD titles. The company plans to begin hiring 400 workers for the second phase of the distribution center sometime in the fourth quarter.

After landing the first Technicolor deal late last year, Panattoni was widely seen as the frontrunner for the second facility given Thomson's expressed desire for a campus-like setting. Denver-based ProLogis was a contender, however, with 90 acres fronting Getwell that backed up to the first phase of Panattoni's Memphis Oaks. The 4010 Holmes site Technicolor chose is across the street from its first facility.

Banks says the reasons for choosing the Panattoni site over the ProLogis land was not expounded upon by company executives.

"I'm not sure there was a material difference between the two," she says. "One was next to (the first building) and one was across the street. ProLogis was there until the end."

Banks says expansion opportunities were a factor. The Memphis and Shelby County Industrial Development Board awarded Thomson a PILOT in 2002 for a $85 million expansion of Technicolor's Memphis distribution operations. The PILOT is applicable to multiple sites and does not specify a number.

Banks says the company doesn't yet know if it will add another building to its Memphis distribution operations, and the decision will ultimately depend on customer demand for DVDs in the next two to three years.

Technicolor's 806,000-square-foot building, which is expandable to 1.2 million square feet, will be the first in what Panattoni has named Memphis Oaks Phase II. The 325-acre park straddles Holmes Road, and the 200-acre Phase II is located on the north side. Al Andrews, partner with Panattoni, says the sheer size of the park gave Panattoni an edge over the ProLogis site.

"This site offers more expansion capability because of the fact that this site is 200 acres in one contiguous block of land," Andrews says.

Andrews says the 200 acres can accommodate up to 3.66 million square feet, including the building soon to be under construction. Phase I on the south side of the park can accommodate an additional 700,000 to 800,000 square feet of development.

Panattoni began a 372,800-square-foot speculative building in its EastPark industrial center after leasing the first Technicolor building. Andrews says that won't happen with this lease despite some positive signs in the industrial market.

"Are we going to go out and start another building right now? No," Andrews says. "Are we going to start one as soon as we make a substantial lease in EastPark IV? Probably."

Indianapolis-based Summit Realty Group represented Technicolor in lease negotiations with local assistance by Wyatt Aiken of Commercial Tennessee, Inc.

By Kate Miller Morton