COVER STORY, SEPTEMBER 2007

INDUSTRIAL INITIATIVE
Three Southeastern cities see industrial growth.
Daniel Beaird

Southeast Real Estate Business has spoken with some economic development leaders in Jacksonville, Florida; Greensboro, North Carolina; and Baton Rouge, Louisiana on the economic development climate in those cities. More companies are recognizing what the Southeast offers geographically in terms of industrial opportunities. Jacksonville, Greensboro and Baton Rouge are all experiencing industrial growth due to some unique factors. The port has expanded in Jacksonville, allowing it to compete with some major ports along the Eastern Seaboard and reach the Far East. Greensboro has operated as North Carolina’s major industrial hub for 150 years and shows no signs of stopping as it complements Charlotte and Raleigh-Durham in the state. And Baton Rouge continues to witness a population boom that it first saw 2 years ago after Hurricane Katrina. Investors’ confidence in Louisiana is returning and Baton Rouge is the industrial beneficiary. 

JACKSONVILLE, FLORIDA

JAXPORT is expanding in Jacksonville with the Mitsui O.S.K. Line terminal.

The recent Jacksonville Port Authority (JAXPORT) expansion has been the talk of the town in Jacksonville these days. Supply chain logistics companies are expanding in Jacksonville with the construction of the $200 million Mitsui O.S.K. Line terminal that will provide direct Asian container ship service and double container service through Jacksonville’s port, strengthening the port’s role and immediately making it a direct competitor with ports up and down the Eastern Seaboard.

“The expansion will allow JAXPORT to move to a first tier port over time,” says Ron Barton, executive director of Jacksonville Economic Development Commission. “It will redefine Jacksonville’s competitive position.” 

Primarily a second tier port in the past, JAXPORT’s strengths have been the importation of automobiles, particularly Toyota, as well as the import and export destination into the United States for Puerto Rico. Jacksonville’s port has been a regional competitor with the ports in Savannah, Georgia; Charleston, South Carolina; and Norfolk, Virginia; but now, Jacksonville’s port will be able to compete with Baltimore’s port and up the Eastern Seaboard.

The Mitsui O.S.K. Line terminal broke ground earlier this year, and will not be active until next fall, but the city can already feel its presence.

“Since the year prior to the announcement until today, you can feel it,” Barton says. “The amount of traffic, the amount of national players, and the emphasis on that particular industrial market segment has taken off.”

As major industrial national players have taken notice of Mitsui’s announcement, they have also noticed some of the advantages of doing business in Jacksonville. Long a railway town, Jacksonville’s intermodal connections aren’t easily matched elsewhere throughout the Southeast. Rail companies such as CSX, Norfolk Southern and Flagler FEC (Florida East Coast Railway) have a long history in Jacksonville with all three rail lines converging in the city.

“Historically, the rail infrastructure has been the driver for Jacksonville because its unmatched in terms of its ability to get product dispersed into the Southeast and Eastern United States,” Barton says. “It remains the city’s single other biggest competitive advantage today.”

The first section of Jacksonville’s proposed outer beltway, which will provide a connection between Interstate 10 in Duval County and I-95 in St. Johns County, outside of the existing I-295 loop, is scheduled to be completed in fall 2009. Named the Brannan Field-Chaffee Expressway project, it is a key element in the expansion, development and investment of Jacksonville’s west side, which is attempting to become a major industrial player and partner for the port.

The first step for Jacksonville’s industrial west side came with the closure of Cecil Naval Air Station several years ago. The 17,000-acre Cecil Field, not all developable, was dedicated to the master plan of reuse to industrial and commercial development, unlike many cities that are reusing these naval fields for mixed-use developments.

Cecil Commerce Center was conceived as an official megasite, a large industrial property qualified to support a major automotive manufacturing facility or similar activity. “The Brannan Field-Chaffee Expressway project will provide businesses, suppliers and commuters direct access to the emerging industries at Cecil Commerce Center and at the port,” Barton says.

And the most notable of those businesses to locate at Cecil Commerce Center is Bridgestone Firestone North America Tire. It plans to invest approximately $44 million into a 1 million-square-foot distribution and logistics center that will create 250 jobs and 219 port-related jobs at Cecil Commerce Center. Meanwhile, public entities have invested more than $180 million in infrastructure at Cecil Commerce Center including industrial scale utilities, new spine and arterial roadways and landscaping.

“The Bridgestone Firestone project will generate approximately $400,000 per year in property taxes, will result in hundreds of high wage jobs, contribute to Duval County’s tax base and further the city’s goal of utilizing Cecil Commerce Center to accommodate large, internationally recognized, targeted industry leaders,” Barton says.  

While the northern portion of Cecil is realizing early success as the land side complement to the expanding JAXPORT, the southern portion of Cecil has the potential to be an aviation and aerospace industry center boasting the third longest runway in Florida at 12,500 feet. Three additional runways each exceed 8,000 feet in length as well.

“With the third longest runway in Florida, there was an aviation and aerospace play for Cecil Commerce Center immediately,” Barton says. “Currently, there are approximately 2,500 jobs at Cecil and they are almost all aviation and aerospace jobs.”

The Jacksonville City Council, while other cities were rezoning to residential and retail, was busy adopting an industrial lands preservation policy. “A lot of areas are losing their land that generates job base growth in terms of industrial,” Barton says. “Jacksonville has recognized those pressures to rezone to residential and retail, and has insured that some of the key land holdings remain industrial, which generates jobs and addresses commerce.”

New businesses and developers are always concerned with working with a number of city entities for a new project. In Jacksonville, they don’t have to worry about that as it is one of only a handful of consolidated governments across the United States. That means the business and the developer don’t have to work with a county government and separate city governments for their project to meet approval. A consolidated government offers city and county officials that work together.

Consolidated governments are historically perceived as being business friendly as it’s a one-stop shop. “We can provide governmental functions, economic development, downtown development, international business development, and put it all under one roof,” Barton says. “For any significant project, it allows us to marshal the top resources of the county and city at the drop of a hat.”

GREENSBORO, NORTH CAROLINA

The FedEx Air Hub in Greensboro will come online in 2009.

Greensboro has been North Carolina’s manufacturing center for the past 150 years. Located equally between Raleigh-Durham and Charlotte, Greensboro has served as a complement to Raleigh’s research and development and Charlotte’s financial center for the state. Greensboro thrives on a young, well-educated workforce as it includes six colleges and universities. Leaning on its educated workforce, Greensboro has transitioned from the manufacturing of furniture, tobacco, textiles and apparel to advance manufacturing and the aviation and aerospace industry.

FedEx, Honda Aircraft Company and Lenovo have recognized Greensboro’s commitment to the advance manufacturing industry with their projects at the Piedmont Triad International Airport. FedEx is building a $300 million express Air Hub at the airport that will come online in early 2009. Piedmont Triad is adding a 10,000-foot parallel runway for FedEx.

Meanwhile, Honda Aircraft Company, a new division of Honda Motor Company, has made a $100 million investment at Piedmont Triad as it will locate its world manufacturing headquarters for its new HondaJet there as well as its product development operation and aircraft manufacturing. Honda Aircraft’s three-building campus will cover approximately 370,000 square feet on more than 75 acres, employing approximately 300 people.

The initial phase for Honda will be a $60 million investment, including a 68,000-square-foot corporate headquarters, design and sales center, and a 147,000-square-foot hangar, in which manufacturing and certification testing will occur. Phase II will be a 150,000-square-foot airframe manufacturing facility. Honda chose Greensboro due to the support from Piedmont Triad International Airport; the business and living environment; accessibility and shipping logistics such as the FedEx Air Hub; the quality of people; and resources for training.

Lenovo is one of many companies with industrial facilities in Greensboro.

Three’s a charm for Greensboro with Lenovo, the world’s third largest computer manufacturer, recently announcing that its first U.S. assembly and distribution facility will be located in Rock Creek Center in Greensboro. The company will build a $10.5 million facility, bringing 47 new jobs to Guilford County with it. The unnamed third party logistics company that will co-locate with Lenovo will bring an additional 85 new jobs as well.

Lenovo has labeled the Rock Creek facility its fulfillment center, supplying product configuration, distribution and light assembly to American customers. Lenovo chose site due to proximity to both Interstates 85 and 40, and due to the fact that Lenovo’s corporate headquarters is located in Raleigh. Developers are currently building a 272,000-square-foot speculative building next to the Lenovo site, creating a convenient location for Lenovo’s suppliers.

“The level of business activity in Greensboro in the past 4 months has been the most robust in the 20 years that I’ve been here,” says Dan Lynch, president of the Greensboro Economic Development Alliance. “Development is cyclical, but we have a well-educated workforce to help fight any downturn in the economy.”

Not only has Greensboro seen the development of the three sites mentioned above, but its six colleges and universities play a large role in the city’s development as well. The University of North Carolina at Greensboro (UNCG) and N.C. A&T State University (NCA&T) have come together for the development of a joint school of nanoscience and nanoengineering on the campus of Gateway University Research Park, a $250 million master-planned project.

So, Raleigh isn’t the only city in the state to hold an impressive list of colleges and universities, and research and development sites. Funding for the joint school was recently approved by the North Carolina General Assembly. The first graduate students could be enrolled as early as 2008, and a building specifically for the school could be completed as early as 2009. The school would be based on the South Campus of the Gateway University Research Park. 

Gateway University Research Park is a bridge between UNCG’s and NCA&T’s research efforts and is expected to be a gateway to the economic future of the region. The first building under construction at Gateway will be occupied by the U.S. Department of Agriculture.

As a result of being home to so many colleges and universities, Greensboro has a built-in population that supports its performing arts. It also has a built-in population that cares about its environment, and with this recent boom in development, the city is having to make sure that the development is right.

“We take protecting and enhancing the environment seriously,” Lynch says. “If you don’t do that, then you won’t be able to attract the companies and the young people that you hope to.”

BATON ROUGE, LOUISIANA

Baton Rouge has witnessed a population influx during the past 2 years post-Hurricane Katrina. As the city tries to take advantage of its newly found residents, there are plenty of pros and cons that are present. The past 2 years have been the best years on record for Baton Rouge’s economy since 1994; and 2007 is on pace to match the figures. The Gulf Opportunity (GO) Zone Act of 2005 has spurred development in the region. All sectors and property types have grown in Baton Rouge during the past 2 years, but the industrial market has outpaced everything else in terms of dollars.

Focusing on those statistics, Baton Rouge has targeted five industries for future growth and development in the area: warehousing and distribution; construction products manufacturing; life sciences; and emerging niche opportunities like video game development, video and film production and downstream petrochemical.

For warehousing and distribution, Baton Rouge offers strong transportation assets, available industrial sites and is focused on large distribution projects and projects that will support the construction products industry. The construction products industry will be driven by hurricane recovery, strong local growth and a skilled workforce.

Baton Rouge is targeting the life sciences industry through the Pennington Biomedical Research Center, the Louisiana State University wet laboratory, a highly educated workforce, and the Louisiana Optical Network Initiative (LONI) and National Lambda Rail (NLR).

“The GO Zone has increased national interest in the Baton Rouge area, and it has accelerated a number of projects that might not have happened,” says Stephen Moret, president of the Baton Rouge Area Chamber. “We’ve seen it have an effect on commercial and new hotel projects and affordable residential housing.”

When signed into law in December 2005, the GO Zone Act created a new category of tax-exempt bonds to finance the construction and rehabilitation of residential and non-residential property located in the GO Zone, in which Baton Rouge is located. The GO Zone Act includes, but is not limited to: retail stores, warehouses, manufacturing facilities, industrial plants, office buildings, bank branches, hotels and motels, restaurants, physician office buildings, medical hospitals and clinics. Qualified project costs also include the cost of qualified residential rental projects.

As Baton Rouge faces an influx of population and increased national interest from the GO Zone Act, it must prepare its infrastructure for the growth. To address this, the city of Baton Rouge is moving forward with the Green Light Plan, a transportation and streets improvement program.

“There’s a plan underway to build a loop around Baton Rouge to include four other parishes,” Moret says. “That’s something that’s been in the public’s mind for a long time and now its come to fruition because of the increased growth and national interest.”

Baton Rouge’s logistics have much to offer with Interstates 10 and 12 running through the city, rail access through the city, and the Mississippi River running next to the city. It’s Louisiana’s state capital and five of the top 10 school districts in the state are located in the Baton Rouge area as it is home to the state’s flagship research university as well, Louisiana State University.

And national players are taking notice. Staples, the world’s largest office products company, has selected Baton Rouge for its new contact center for its North American delivery business. The center will provide a training facility for Staples’ customer service representatives as well as office space for management and support staff. Located on Highlandia Road, Staples plans to have more than 400 contact center jobs during the next 4 years.

The industrial trend has hit Hammond, Louisiana, as well. Hammond is located at the intersection of I-12 and I-55, and it has become the nexus of two large metropolitan areas as it’s located in between Baton Rouge and New Orleans and has benefited from a population surge itself. Several large companies have recognized Hammond and the I-12 corridor for its location as evidenced by the presence of large warehouse and distribution centers for The Home Depot, Wal-Mart, Folgers Coffee, Cardinal Health, 84 Lumber and Winn-Dixie.

Outside investors are recognizing the I-12 corridor as well. Chicago-based WexTrust Capital, through its affiliate Hammond Industrial Holdings, recently purchased the 710,603-square-foot Pride Drive Business Center in Hammond. Rail service to the building is provided by Canadian National Railway, with access to five mainline railroads. The property is also close to five Interstate exits, the Hammond Municipal Airport and a barge loading facility at Port Manachac, which handles bulk and containerized cargo. WexTrust has announced the possibility of adding up to three building on the site totaling 400,000 square feet in the near future.


©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.