London-based medical products manufacturer Smith & Nephew relocates

Journal Record, The (Oklahoma City), Dec 8, 2003 by Darren Currin

Medical products manufacturer Smith & Nephew will expand its Oklahoma City operations early next year by relocating into a significant portion of the former Seagate manufacturing facility located at the intersection of Reno and Meridian avenues.

The London-based company completed a lease last week to occupy about 100,000 square feet of the 154,000-square-foot facility that was vacated by Seagate in December 2002.

According to Hooks Johnston, senior vice president of endoscopy operations for Smith & Nephew, the company has simply outgrown its current facility at 3600 NW 138th St. as a result of its continued growth over the past several years.

The Seagate facility is very suitable for our manufacturing environment, he explained. It's all on one floor and obviously from a material flow point of view that is very desirable.

Johnston said the company has been forced to use several off-site storage locations in recent years due to its inability to expand in its current location that consists of 51,000 square feet of space. By doubling its space, Johnston said Smith & Nephew will now be able to house all storage and manufacturing operations under one roof.

We can now put everything together in one facility while at the same time provide some options for expansion in the future, noted Johnston.

The company will begin relocating its equipment and 130 employees to the new facility in January or February, said Johnston. He expects the relocation to be completed by the second quarter.

While Smith & Nephew is not planning an immediate expansion of its employee base, Johnston is confident the new facility will allow the company to increase the number of endoscopic products that are manufactured in the Oklahoma City plant. The company is scheduled to start producing a new line of cameras at its Oklahoma City plant designed for use by physicians during endoscopic surgery.

We have continued to put additional products in Oklahoma City over the years as well as having products grow that were originally manufactured in Oklahoma City, said Johnston. They continue to build quality products that have gained us some footholds in new surgical techniques, and the fact they have done well is the reason we are getting more space.

Founded in 1856, Smith & Western develops and markets advanced medical devices specializing in orthopedics, endoscopy and advanced wound management. With operations in 32 countries, the company currently employs more than 7,500 people worldwide with annual sales of $1.1 billion.

Randy Lacey and David Lide of Grubb & Ellis|Beffort Brooks Hogan represented Smith & Nephew in the lease transaction and Marc Brown of Trammell Crow Company represented the landlord.

According to Lacey, Smith & Nephew's lease of 100,000 square feet of industrial manufacturing space will have a strong impact on the overall industrial real estate market, which has been plagued with a high vacancy rate of 16.9 percent over the past two years.

There was about 3 million square feet of space that came on the market in the last of 2002 creating a high 20 percent vacancy rate in buildings that are 50,000 square feet and greater, explained Lacey. This lease is chiseling away at the 3 million square feet that came online.

Lacey also noted that transaction is also significant in the fact that the former Seagate building is considered a special purpose manufacturing facility due to its 60,000 square feet of office space, clean rooms for manufacturing microchips and climate controlled areas.

This building was a perfect fit for a company like Smith & Nephew that produces medical equipment, he adds. Not only did they absorb 100,000 square feet of space, but it was 100,000 square feet of special purpose space, which is typically much harder to lease.

With the addition to the Smith & Nephew lease, Lacey said the industrial market is starting to see a slight turnaround noting several recent transactions of industrial users leasing or buying space of around 40,000 to 50,000 square feet. He expects activity to increase with some of the large blocks of available space currently available on the market being absorbed in 2004 and 2005.

Constructed in 1968, the former Seagate facility is located at 10 N. Meridian Avenue and consists of two buildings. The remaining 54,000-square-foot building not being used by Smith & Nephew will be made available for lease by Trammell Crow.