News Article | 4/28/2006

Developer plans Westside warehouse

JACKSONVILLE — A local third-party logistics company is partnering with a Dallas-based developer to build a 400,000-square-foot distribution center that will increase the company’s warehouse space by about 40 percent.

As part of a joint venture, Hillwood Development Co. will develop a build-to-suit distribution center for Laney & Duke Terminal Warehouse Co., which operates about 1 million square feet of warehouse space in Jacksonville and Tampa.

The project is the latest distribution center announced that is to some degree prompted by plans for a container-handling terminal at Dames Point that will serve ships with routes to Asian ports.

In August 2005, ocean carrier Mitsui O.S.K. Lines Ltd., known as MOL, signed a 30-year lease with the Jacksonville Port Authority to make Dames Point its base of East Coast operations. Tokyo-based MOL will build a $200 million, 158-acre container terminal to be operated by a subsidiary stevedoring company. The terminal is expected to open in late 2007 or early 2008.

Laney & Duke President Brian Duke said the port business created by MOL is encouraging to logistics and warehousing companies like his.

“We hope to gain more offshore business through the port of Jacksonville,” Duke said. “And if we do, we’ll need more space.”

National retailer Michaels Stores Inc. (NYSE: MIK) recently said it’s relocating its Southeast seasonal distribution center from Savannah, Ga., to Jacksonville in large part because of its strong business relationship with MOL at other ports.

Laney & Duke operates seven warehouses, six in Jacksonville and one in Tampa. The joint venture has bought one of those warehouses, a 360,998-square-foot building on Faye Road near Dames Point, which will be leased to Laney & Duke.

The future distribution center will be built in Westlake Industrial Park on the Westside. The site was attractive to Hillwood and Laney & Duke because it has easy access to Interstate 295 via Pritchard Road, which in turn links it quickly to Interstate 95 and Interstate 10.

Hillwood introduced itself to Laney & Duke through a fellow third-party logistics company in Dallas, Duke said. That company had grown its operation from about 700,000 square feet to more than 2 million square feet through a similar arrangement with Hillwood.

Working with Hillwood provides a path for expansion that Laney & Duke wouldn’t be able to follow on its own, Duke said. “We intend to partner with Hillwood as we grow our business.”

For Hillwood, partnering with an established Jacksonville third-party logistics company provides an entry to a market poised for growth in the logistics industry, said Gary Frederick, vice president of Hillwood Investment Properties.

“We think Jacksonville is the key distribution point for Florida,” Frederick said. “With the MOL terminal, there’s going to be the availability of bringing containers from Asia that hasn’t been there.”

Hillwood, a Perot company with about 9.6 million square feet of commercial space under construction across the country, focuses on projects related to supply chain management, Frederick said. Jacksonville fits well into the company’s objectives, particularly given the availability of CSX Transportation Inc., Norfolk Southern Railway Co. and Florida East Coast Railway LLC lines, as well as a well-positioned airport.

“Add all those things together and you have a lot of transportation infrastructure centered in Jacksonville,” he said. “It’s a strong indicator to us that there will be demand for distribution space in Jacksonville.”