Jacksonville's distribution-related business is taking off again, fueling a boom in industrial real estate.
By Jane Tanner
Jacksonville's promoters have scripted many catchy monikers throughout the years: Bold New City of the South and Florida's First Coast, to name a couple. They could add another -- The Pass-Through City -- given the growth in the distribution and warehouse segment of the city's economy.
Vacancy rates in industrial real estate have been running at a tight 5.5%. While the market has cooled a bit after a big growth spurt two years ago, many expansions and new entrants are moving through the pipeline. "We feel the market is healthy enough to do some spec," says Clif Byrd, president of Wesjax Development, an affiliate of N.G. Wade, which has operated in Jacksonville since the 1960s.
Byrd's company has a 95,000-sq.-ft. speculative distribution center under construction and blueprints for another 125,000-sq.-ft. center.
Last year, Wesjax built a center for Federal Express that tripled the size of one of its operations in the area.
At Caribbean Shipping & Cold Storage, an operation that shuttles food to restaurant chains and other customers in the Caribbean and South America, sales jumped from $3.5 million in 1994 to $20 million last year. The company plans to double its cold storage space to four million cubic feet.
Laney & Duke Terminal Warehouse is building a 361,000-sq.-ft. facility on the city's north side, adding to the 650,000 square feet it already owns, while also operating an additional 2.7 million square feet. The new space will accommodate a 15% to 20% increase in business from the Hanes underwear division, according to Laney & Duke CEO Tad Duke.
A Jacksonville Chamber of Commerce report listed 14 new distribution-related operations and 13 expansions between 1998 and mid-July 2000. Ten of the new operations and six expansions were announced in 1998. Some company changes during that period do not appear in the report, and since mid-July new announcements have been made regularly.
The expansion is in rhythm with the overall growth of the U.S. and state economies and the orientation toward hyper-consumption.
Jacksonville is in a good position to receive and transfer goods with the port, railroad network and Interstates 10 and 95. Goods can easily be transported to 85% of the southeastern U.S., and the city is an efficient launching point for the Caribbean and South America. Also contributing to the growth: Rents and labor run roughly 10% lower than in competing cities.
The lion's share of distribution jobs don't pay well -- between $5.50 and $12 an hour for low-skilled labor; however, salaries run up to $18.79 for truckers, according to the most recent Florida Department of Labor and Employment Security report on wages in the Jacksonville metro area. One plus: Distribution hubs typically draw better-paying manufacturers, who want to be close to their distribution points.
In addition, the distribution growth is sparking expansion at port and related firms with higher wages. Next year, the Jacksonville Port Authority begins deepening its harbor channel from 38 feet to 41 feet to accommodate larger cargo ships. "The growth of the port is really important," says First Union Bank economist Mark Vitner. "Port capacity is getting stretched all over the country."
In the News
Alachua -- Regeneration Technologies (Nasdaq-RTIX), a spinoff of the University of Florida Tissue Bank, went public at the end of the summer. The company processes tissue from human cadavers for surgical grafting as an alternative to skin from the patient's body or use of synthetics. The UF Tissue Bank held 13.5% of the stock when it first went public.
Clay County -- Adevco Corp. is building a 60,000-sq.-ft. speculative office center fitted for companies engaged in website and e-mail sales and customer service. The Atlanta-based firm is establishing its office park on Fleming Island because of available labor.
Jacksonville -- Winn-Dixie reportedly is searching for a new advertising agency. Cook Marketing Communications, which has been handling the grocer's account since 1965, has already been downsizing on the heels of the restructuring at its largest client. Once considered the big-name firm in town, Cook announced it will move from the downtown skyline tower Enterprise Center to smaller offices. Its staff is down from 74 to 52.
Lockheed Martin Corp. may lease a hangar at Cecil Commerce Center, the former Navy base turned private business park. The company would bring several hundred employees to repair Navy P-3 aircraft. Final negotiations with the Jacksonville Economic Development Commission were planned for this fall. Lockheed Martin would join aerospace giants Boeing Co. and Northrop Grumman Corp., which already have operations at Cecil.
The Educational Community Credit Union hopes to build an $8-million headquarters near the LaVilla redevelopment area. If approvals and permitting go through, construction would begin early next year.
The north side of Jacksonville may get a new office-warehouse complex if plans by Melrose-based Wurn Investments & Properties are approved. The project would include nine buildings with a total of 110,000 square feet.
The Jacksonville Port Authority will benefit from liberalized trade between the U.S. and Caribbean companies when the Caribbean Basin Initiative goes into effect this month. Akin to the North American Free Trade Agreement, the initiative should discourage Caribbean manufacturers from relocating to Mexico to take advantage of NAFTA. Jacksonville's ports handle a large volume of cargo from Caribbean countries -- last year 2.7 million tons from Puerto Rico. The Dominican Republic is the fastest-growing economy in the basin.
World Brands, which imports and exports furniture, planned to relocate its headquarters here next spring from Charleston, S.C., and open a warehouse on the north end of the city. The target countries for furniture exports from North Carolina and other cities aren't served by the Jacksonville Port, so World Brand will use containers from Blount Island marine operations here and truck them up to the port in Savannah, Ga.
Atlanta-based World Travel Partners opened a call center on Jacksonville's Southside that will employ about 150. The center will handle calls for Deloitte & Touche.
Popular NFL Jaguars linebacker Kevin Hardy opened an upscale shoe store, Pieda Shoe Gallery, with his cousin Hanan Hardy. Hardy designed the interior himself instead of hiring a professional but says he's not planning to make a career of it.
New York-based Continental Concessions Services, which distributes candy to video rental chains such as Blockbuster Video, plans to open a distribution center at Jacksonville International Tradeport this fall.
Merrill Lynch initiated a strategic review this summer of the Merrill Lynch Credit Corp. office in Jacksonville. The brokerage is considering its options, including poss-ibly selling the business. The Merrill Lynch unit employs about 700 here.
Cash-hungry CSX Corp. sold its delivery management unit CTI Logistx for $650 million to Dutch company Post Group NV. CSX says the cash will be used to pay down its $6 billion in long-term debt. CSX invested in CTI in 1988 and then bought it in 1992. With 200 employees at its Jacksonville headquarters and 4,500 worldwide, CTI handles logistics for delivery parts from auto tires to computer chips. CSX is shedding units that aren't directly related to its railroad business.
Mayport -- The once-thriving fishing village has been pushing for revitalization and is likely to get a $650,000 boost from Jacksonville's coffers. Already, $3.4 million in water, sewer and utility improvements are under way. A handful of shrimp boats remains from what was once a large fleet.