Hobby Lobby is one big arts and crafts project in progress – NewsOK.com

The address for the latest million-square-foot Hobby Lobby warehouse will be 6701 SW 44. When it's complete next year, the closely held arts-and-crafts retail giant will have nearly 10.5 million square feet of warehouses in southwest Oklahoma City. [PHOTO BY CHRIS LANDSBERGER, THE OKLAHOMAN]

A million square feet here and a million square feet there, and pretty soon you're talking about Hobby Lobby, which just started yet another nearly 1 million-square-foot warehouse near its corporate headquarters.

When the new distribution center at 6701 SW 44 is finished a year from now, Hobby Lobby Stores Inc. will own nearly 10.5 million square feet of warehouse space, including a small percentage of office space in each structure, in industrial southwest Oklahoma City.

That's 241 acres, indoors, enough for 185 football fields.

That's about 10 percent of all industrial space in Oklahoma City, owned and leased, according to industrial broker Randy Lacey at CBRE.

Hobby Lobby "has by far the largest nongovernment owner-occupied industrial complex in Oklahoma," said industrial broker Bob Puckett at Price Edwards & Co.

But there's more: Hobby Lobby also has some 1,200 acres in hand for future expansion, said Bob Miller, communications coordinator.

Financials

Hobby Lobby ended 2016 with nearly 750 stores in 47 states, well on its way to a long-term goal of 1,000, according to retail consultancy Creditintell.

Hobby Lobby said it opened 56 new locations last year and planned to open another 60 and add 1,700 to 1,500 new employees this year.

Creditintell said the privately held company, which is affiliated with the Mardel Christian & Education and Hemispheres chains, had estimated revenue of $4.3 billion for 2016, an 8 percent increase compared with the previous year.

Hobby Lobby's rapid expansion is being funded with strong cash flow annual earnings of an estimated $860 million, or 20 percent before financial expenses with no debt, but $275 million in unsecured revolving credit with Bank of Oklahoma, according to Creditintell.

Retail acumen

Hobby Lobby also has been taking advantage of store closings in preferred community shopping centers and power centers. It often moves into spaces vacated by Sports Authority, Kmart, Sport Chalet and Sears, Creditintell said in a May 15 report.

"The glut of available real estate in the wake of the Sports Authority liquidation and Kmart's continued closings has allowed Hobby Lobby to opportunistically move into new locations at favorable lease terms," Creditintell said.

It is a well-run company, said Jim Parrack, retail specialist and vice president at Price Edwards & Co. commercial realty.

"They have no debt, which is almost unheard of in retail, and stick to what works," he said. "They value their employees and spend time training them, which leads to better customer experiences, critical in this day and age.

"And Hobby Lobby falls into the category of a value retailer, a category of which has held up well through the economic ups and downs of the last several years."

Industrial insight

Puckett said Hobby Lobby has been as savvy with its industrial development decisions at home as it has with retail property planning across the country.

"They have developed a supply and delivery system to their stores across the country that allows them to operate out of one location," he said. "This avoids expensively duplicating regional distribution centers in various locations. Part of this advantage is being centrally located in Oklahoma City with adjacent to major country-spanning interstate highways.

"Hobby Lobby is the best example of the transportation advantages to Oklahoma that the state Department of Commerce and the Oklahoma City Chamber of Commerce have been emphasizing for years."

Faith base

Parrack said the conservative Christian faith of the owners, the Green family, is an important part of the Hobby Lobby story even if it's a new warehouse getting attention.

Hobby Lobby stores are famously closed on Sundays out of the family's religious conviction, and the company has also been known since the mid 1990s for placing full-page newspaper ads nationwide celebrating Christmas, Easter and Independence Day.

Parrack said the Green family's faith, and its influence on its business decisions, are part of the extended Hobby Lobby saga, the chain's continued expansion nationally, and its growing industrial footprint in southwest Oklahoma City.

"You can't talk about Hobby Lobby without thinking of them as a faith-based company, and, while there are no analytics to determine what role that's played in their success, it's who they are and can't be overlooked," he said.