Bull’s-eye: City hitting logistics target with Samsung, Sam’s East, Vistakon
by Karen Brune Mathis, Managing Editor
Samsung Electronics and Sam’s East are two of the latest big-name companies that fit the City and JAX Chamber’s plans to focus on logistics, one of the targeted industries receiving intensified recruitment and development from the chamber’s JAXUSA Partnership and other economic development leaders.
They also appear to be two of several others in negotiation.
JAXUSA Partnership President Jerry Mallot said Samsung and Sam’s East are among “several projects that are coming together in the distribution area.”
“It does appear it is a real resurgence of distribution that we have been waiting on for a while, and it’s a good sign that the economy is recovering as more products are being positioned for delivery to retail outlets in the Southeast,” he said.
J.J. Conners, associated with the property developer, said Monday the lease for Sam’s East, part of Wal-Mart Stores Inc., was signed last week.
Wal-Mart spokesman William Wertz said the facility will open in the first quarter of 2013.
“Jacksonville was selected as a strategic location to support the Sam’s Club business in the Southeast,” he said. He did not provide other details.
Sam’s East will occupy almost 130,000 square feet of space in the Alta Lakes Commerce Center in North Jacksonville near the Blount Island and Dames Point Jacksonville port terminals.
“This is very big. To me, we are beginning to turn the corner. There is a lot of activity in the market. For a company as substantial as Wal-Mart to select our building is huge,” Conners said.
Conners said the project illustrates the area’s logistics environment.
“It shows the strength of our port, the strength of the transportation network and the strength of the transportation infrastructure to choose a location like that,” he said.
The chamber’s Innovate Northeast Florida Target Industry Implementation Plan includes expanding the top targeted industries for Northeast Florida — advanced manufacturing, aviation, financial services, headquarters, health and life sciences, information technology and logistics, which includes warehouse and distribution centers.
In fact, plans show the chamber’s redevelopment of its Downtown headquarters is slated to include the America’s Logistics Center tagline and logo.
Holland & Knight partner George Gabel, chairman of the North Florida Logistics Advisory Group and the chamber’s International Business Leader of the Decade, said growth of distribution centers represents a long-term benefit.
Gabel said the distribution of more goods means that more ships and more shipping lines likely will call on Jacksonville’s port.
“And by having more options for shippers to use, it makes the cost less because you have more competition,” he said.
At the same time, distribution centers don’t typically generate large numbers of highly paid positions.
“We for years were not trying to get distribution centers because they were not high-wage jobs,” Gabel said, explaining that Savannah, Ga., a major port competitor, realized the importance of such centers.
“I just know that we’ve gotten the message and as a community we are going after distribution centers,” he said.
Gabel said the 1 million-square-foot Bridgestone Firestone North American Tire LLC distribution center in Cecil Commerce Center and the Coach distribution center in North Jacksonville are two examples of established successes. Property records show the Coach center is more than 600,000 square feet in size.
Gabel, who served on the former Jacksonville Economic Development Commission, said the City should consider economic incentives for distribution centers. He said Savannah provides incentives to manufacturers who increase their shipments each year.
“That’s one way to deal with it and it would require distribution centers to have that happen,” he said.
“Mayor Brown is always happy to have another company come to Jacksonville and expand their presence,” said a statement from Mayor Alvin Brown’s office.
He said the Samsung center in northwest Jacksonville “is an example of the draw that Jacksonville has for future logistics operations. Jacksonville is growing, competing, and winning jobs and capital investment.”
Just within the past several weeks, news broke that:
• Samsung Electronics America Inc. plans to open a Jacksonville warehouse for its home appliances division in Westlake Industrial Park.
Samsung Electronics, the South Korea-based maker of electronics, home appliances and other products, posted a job opening for a Jacksonville warehouse manager who “will manage the dedicated home appliance warehouse during the new business launch.”
The City approved a permit Friday for interior improvements to 140,000 square feet of space, specifically the installation of 12 dock levers, within a 400,000-square-foot center at 12400 Presidents Court.
The park is north of Interstate 10 and west of I-295.
The 140,000 square feet comprises 135,500 square feet of warehouse space and 4,500 square feet of business space. The $417,194 construction job will be handled by The Conlan Co.
A Samsung spokeswoman said the company had no information to share at this time.
• Sam’s East Inc., which is part of the Sam’s Clubs warehouse-club segment of Wal-Mart, is shown on permitting plans as the 129,665-square-foot tenant for a North Jacksonville warehouse.
The City approved the permit Friday for The Conlan Co. to construct office space, a truckers’ lounge and a dock office within Building 1 at Alta Lakes Commerce Center.
The center was developed off of the Interstate 295 East Beltway and Faye Road.
The build-out for Sam’s East Inc. shows a construction cost of $1.1 million. The address is 2550 Cabot Commerce Drive.
The property ownership group is shown as Cabot II-FL3L01 LLC, based in Boston. Conners was part of the original development team on the project and is working with Cabot through his current company, Chestnut Hill Investments LLC.
He said Sam’s East is represented by the Atlanta office of Colliers International and Alta Lakes Commerce Center is represented by Grubb & Ellis Phoenix Realty Group of Jacksonville.
Conners said Monday that Sam’s East will use a 129,000-square-foot building and 3.5-acre trailer parking lot. He said work will begin this month on the building and by early October on the trailer parking. It will include loading space for 42 trucks.
“This is exactly the reason Cabot developed this park,” he said.
Conners said the Request for Proposals for the Sam’s East project was received in the fall of 2011 and Alta Lakes was short-listed at the beginning of the year.
As of July, Sam’s Club operated 613 clubs in the United States and Puerto Rico. According to Wal-Mart’s annual report filed with the Securities and Exchange Commission, the Sam’s Club business segment was supported by 25 distribution facilities across the country as of Jan. 31.
Florida is a big market for Sam’s Clubs. For the 2012 fiscal year, which ended Jan. 31, the company had 611 Sam’s Clubs in the U.S. and Puerto Rico. Of those, Texas had the most, at 73, followed by Florida, at 44, and California, at 33.
• Correctional facilities commissary supplier Union Supply Group is shown on documents as the new tenant of a 146,280-square-foot building at the Creekside Distribution Center at Jacksonville International Tradeport.
The City approved a permit for Haskew Co. Inc. of Jacksonville to build out tenant improvements at 13903 Alvarez Road, which is near Jacksonville International Airport. The space is Building 2 in the Creekside center. The project cost is $1.45 million. Union Supply is based in Rancho Dominguez, Calif., near Los Angeles.
• JanPak Inc., a distributor of cleaning and packaging products for businesses, will move in mid-November into a building at the Crossroads Distribution Center at 6600 Pritchard Road, following tenant improvements.
Deep South Electric Inc. is the contractor for a build-out of 84,244 square feet of space at a project cost of $458,000.
JanPak is based in Davidson, N.C. A news release from Republic Property Co. of Atlanta said JanPak signed a lease for the space in a previously unoccupied warehouse.
It will move from 90,000 square feet in the nearby Westside Industrial Park, where it was leasing 60,000 square feet of space and subletting another 30,000 square feet.
• SSI Lubricants LLC, based in Winter Haven, bought a West Jacksonville transportation warehouse. SSI Lubricants paid $1 million for the 5.65-acre site at 402 Ellis Road S., which includes a warehouse of about 22,000 square feet, property records show.
The sale was recorded Sept. 5. The seller was CTSI Holdings LLC.
The SSI Petroleum website, ssipetro.com, says the company has been servicing Florida businesses with fuels and lubricants for 48 years and it features the Castrol and StarFleet Lubricants logos.
• Vistakon, the Jacksonville-based division of Johnson & Johnson Vision Care Inc., is working toward a distribution center expansion of 104,227 square feet at its Southside campus.
Vistakon proposes to expand its Southside distribution center by almost 105,000 square feet, according to the company and plans filed with the City and the St. Johns River Water Management District.
Vistakon operates a 661,174 square-foot facility in Deerwood Park where it makes the ACUVUE brand of disposable contact lenses as part of Johnson & Johnson Vision Care Inc.
Spokeswoman Betsy McNiel, manager of global communications and PR for Johnson & Johnson Vision Care, said in a previous statement that the company has asked the City to review proposed expansion plans for the Jacksonville distribution facility.
“The additional space will be used to meet growing capacity requirements,” she said. The company has about 1,800 employees in Jacksonville. “No significant increase in hiring is expected for the distribution center,” McNiel said.
The Jacksonville campus consists of office, research, laboratory, manufacturing and distribution areas.
The expansion boosts its presence in Jacksonville on the 68.87-acre complex at 7500 Centurion Parkway.
• ATI Products Inc. is opening a distribution center at 4101 Bulls Bay Highway in the Westside Industrial Park.
Pattillo Construction Corp. is the contractor for the 40,350-square-foot project at a cost of $143,598.
The center comprises two companies that distribute parts for agricultural and turf equipment. Both are owned by the worldwide John Deere outdoor and farming equipment conglomerate.
Robert Fuller, ATI Products regional manager of distribution for Eastern North America, said previously Jacksonville was chosen because it provides one-day delivery throughout the state with UPS service.
The center will be a wholesale distributor to equipment dealers, lawnmower shops and farm equipment dealers. It will stock about $2 million in inventory and distribute parts for all makes of agriculture equipment and for lawn and turf equipment.
Fuller said the distribution covers Florida, South Georgia and into Alabama with next-day service to dealers.
“Jacksonville is the only city in Florida that, distributionwise, you can hit every local market in Florida with next-day service with UPS,” Fuller said. He said 99 percent of ATI’s packages are shipped through UPS.
• Grubb & Ellis Phoenix Realty Group announced Monday that brokers Aaron Zarle, Bryan Bartlett and John Richardson brokered a sale on behalf of the seller for a 240,000-square-foot distribution center 10089 N. Main St. at Imeson International Industrial Park in North Jacksonville.
The building was owned by W.P. Carey & Co. LLC, an investment management company that provides long-term sale-leaseback and build-to-suit financing. It was purchased by investors who plan to renovate and lease the space.
Osher Realty ADA Compliant Limited Partnership, based in Canada, bought the building for $3.875 million on Aug. 9.
“The sale of this property is a sign of momentum in the market picking back up again and we look forward to seeing more movement in the area,” Zarle said.
• As of June 30, the end of the second quarter, real estate companies were reporting improvement in the Jacksonville area industrial market while cautioning about uncertainty until the November elections.
“The Jacksonville industrial market is slowly showing positive signs of a recovery in conjunction with an improving economy,” reported the CBRE real estate brokerage company.
It specifically cited business from Jacksonville’s port as a driver.
CBRE reported a 12 percent vacancy rate among industrial buildings. It said the Southside and Westside markets “contributed the majority of the positive absorption during the second quarter.”
Absorption is the rate at which available space in the marketplace is leased.
The Cushman & Wakefield of Florida Inc. company reported an overall industrial vacancy rate of 11 percent, with a 13.3 percent vacancy rate among warehouse and distribution space, at the end of the second quarter.
“The Jacksonville industrial market remains in need of new demand to spur true rehabilitation,” it reported. “Cushman & Wakefield expects that spark to arrive at least in part with the completion of several transactions pending at midyear, causing vacancy to resume its downward trajectory for the remainder of 2012,” it said.
Cushman & Wakefield and CBRE both cited the need for political clarity to help spur economic decisions.