The Crossroads of Growth

Industrial projects crisscross peninsula as suburban Florida reaches once rural areas.

Site Selection
May 2006

http://www.siteselection.com/

Tucked into a sleepy hamlet of Polk County in the Florida heartland are the beginnings of an industrial project that could forever change the landscape of distribution in the Sunshine State.

The 1,250- acre (506- hectare) CSX Integrated Logistics Center in Winter Haven – the first such facility in the southeastern United States – is being planned by the Jacksonville- based rail giant to accommodate Florida's exploding population and demand for consumer products.

Upon build- out, the facility would create 8,500 full- time jobs in Polk, generate more than US$10 billion in economic development activity and add $900 million in local, state and federal tax revenue over 10 years.

The ILC eventually will include 3 million sq. ft. (278,700 sq. m.) of warehouse space, another 1.5 million sq. ft. (139,350 sq. m.) of industrial sites and 500,000 sq. ft. (46,450 sq. m.) of office space. The total annual payroll of the new jobs would be $282.2 million.

“Florida's continued economic growth appears certain," says Charles McSwain, who oversees all development activity for CSX Transportation Inc. "The coming population explosion will require a tremendous volume of construction materials, and the resident population will require a huge supply of consumer goods. CSX Transportation has a significant transportation infrastructure to provide rail service in Florida and is partnering with the state to develop a more multi-modal set of freight-movement solutions. Using multi- modal solutions, a great percentage of Florida's freight can be moved on barge or rail."

McSwain calls the development of the ILC in Winter Haven "a significant step" in the diversification of transportation modes in Florida and one that can "minimize the conflict between freight movement and quality of life."

In fact, it is that tension – between the need to keep up with the demands of Florida's population explosion and the need to preserve the quality of life that attracts people to Florida – that is at the heart of projects such as the Polk ILC.

McSwain and his colleagues at CSX Real Property Inc. believe that continued investment in intermodal transportation is the best solution to that challenge.

Intermodal transport – the movement of consumer products and parcels using a combination of truck-to-rail-to-truck transfer – is the fastest growing sector of the railroad industry. A single intermodal train can do the work of 300 trucks.

Several advanced intermodal facilities have been or are being developed around the country. The most notable one to date is Alliance, Texas, where 20,000 jobs and $23 billion in economic impact were generated over a 13-year period on 2,500 acres (1,012 hectares).

The Winter Haven ILC will be only half that size, but it has the potential to do for freight movement and the Florida economy what Alliance did for Texas.

CSX Corp. first proposed the land acquisition on Jan. 18. While the transaction with Winter Haven is 18 months away, the necessary rezoning and change in land- use restrictions on the first 300 acres (122 hectares) are under way.

Annexed by the city last year, the property is still classified under Polk's "institutional" zoning. The city will soon change the designation to industrial. Once that step is completed, the land-use change must go before the state Department of Community Affairs for approval.

City officials said they expect to close on the $21.8-million sale of the property to CSX near the end of next year.

Rick Hood, assistant vice president of CSX Real Property, was quoted in The Ledger, a daily newspaper in Lakeland, as saying, "Winter Haven was chosen because it is centrally located in Florida near a number of consumer markets. There's potentially 1,250 acres [506 hectares] available under a single ownership. The entire 1,250 acres is also along our main rail line."

The planned logistics complex will include a truck, rail and warehousing hub and terminal for the transfer and storage of containerized consumer goods. The Winter Haven site is attractive to CSX for its linear layout; the site allows two miles (3.2 km.) of rail frontage.

"This is an ideal location to serve the rapidly growing Florida market," said Clarence Gooden, chief commercial officer of CSX. "We are committed to integrating our facility plan with Winter Haven's standards and needs."

The complex is located north of Old Bartow-Lake Wales Road and west of the CSX Transportation railroad tracks, near the largely migrant farm-worker communities of Eloise and Wahneta.

An Historic Shift

The CSX project could be the biggest thing to happen to Winter Haven, a city of 30,000 people, since the Boston Red Sox moved their spring training site from Scottsdale, Ariz., to Winter Haven's Chain O' Lakes Park in 1966.

The Red Sox no longer train in Winter Haven, having moved to Fort Myers in 1993, but Polk's second largest city still draws crowds from Ohio every spring to cheer on the Cleveland Indians.

"This project will be a tremendous asset to our community," said David Greene, city manager for Winter Haven. "As experiences with similar facilities have shown, the ILC could generate more than 8,000 jobs in Winter Haven and Polk County as companies establish nearby warehousing, manufacturing and logistics operations."

The state gave the project an added boost when the Florida Department of Transportation endorsed it. "Florida's growth management goals ensure the efficient movement of people and goods," said DOT Secretary Denver Stutler Jr. "The new logistics center should help reduce long- haul transportation costs for shippers and provide improved freight mobility."

Mike McMahon, community and economic development director for Winter Haven, calls the CSX development one of the most important projects in his city's history.

"We are looking at a return on investment of $500 million in taxes and fees over 10 years to the city," said McMahon. "We consider this a partnership with CSX, and Winter Haven won't be the only Polk community that will benefit. Winter Haven can't support all 8,000 jobs. Bartow and Lake Wales will benefit too. This project will also diversify Winter Haven's economy, freeing it from its dependency on the tourism and citrus industries."

The project almost didn't come to Winter Haven, the land of Cypress Gardens, orange groves and world-class water-skiing. George Livingston, principal of NAI Realvest Partners, the Maitland-based firm that served as the site consultant on the project, tells Site Selection that CSX initially considered locating its first-ever Florida ILC in the 3,000-acre (1,215-hectare) Polk Commerce Center along Interstate 4 north of Auburndale.

The problem with that site, however, was too many landowners, Livingston said. However, he added, this may not be the only ILC that CSX will pursue developing in Florida. "They are also looking at a potential site in Wildwood near I-4 and the Florida Turnpike," he noted.

In many ways, the Polk ILC is just the tip of the iceberg. As the cost of property in Florida's coastal communities continues to skyrocket, more developers and employers are turning to the peninsula's interior – where land is cheaper and labor more plentiful – for industrial growth opportunities.

A case in point is the Cellynne Corp., which just last month completed the $29-million expansion of its paper conversion plant in Haines City in northeast Polk. The project created more than 30 high-value engineering jobs.

Marc Allegre, vice president of Cellynne, tells Site Selection that "Polk was very attractive for geographical reasons. We received a good rate on the 40-acre [16-hectare] land purchase. Haines City is a smaller community, and we found it easier to deal with the county government and various agencies here. Plus, we can recruit workers from the local area."

Allegre added that Cellynne received a state incentives package that abates taxes for three years, as well as "considerable help from the Haines City economic development agency."

To encourage the expansion, Haines City recently completed the installation of a $5.2-million rail spur from the CSX line to the city's industrial area. The rail spur is expected to stimulate additional manufacturing opportunities in Haines City.

Other major industrial projects announced or completed recently in Polk include Coca-Cola's $35-million expansion of its Simply Orange Juice line in Auburndale; ButterKrust Bakeries' $25-million expansion in Lakeland; Progress Energy's $250-million capital investment at its Andrew Hines Power Complex south of Bartow; and Southern Wine and Spirits' $40-million, 653,000-sq.-ft. (60,664-sq.-m.), 340-employee distribution center in Lakeland.

Jim DeGennaro, director of business development for the Central Florida Development Council, says, "We are the logistics base for the 18 million people in Florida. The growth in this state is now moving inland, and rapidly growing companies are now looking at Polk as the logical place to expand their operations."

Among them are a host of building materials firms, which like the low-cost land and affordable, available labor in Central Florida. Hanson Pipe is building a $45-million concrete pipe factory on 83 acres (34 hectares) in Winter Haven, employing 50 workers in a 150,000- sq.-ft. (13,935- sq.-m.) plant; Paver Modular is building a $3-million plant in Haines City; Amerix of Clearwater is investing $5 million in two plants in Auburndale; and Polyglass of Italy is investing $10 million and hiring 80 workers at a plant it purchased in Eloise.

The next blockbuster deal for Polk will be the establishment of a new University of South Florida branch campus along I-4, says DeGennaro. The Williams Co. donated 530 acres (215 hectares) to the Tampa-based school, which plans a $260-million campus there to accommodate up to 16,000 students.

The new campus could serve as the mid-point anchor of the Florida High-Tech Corridor, a research initiative that stretches from the main USF campus in Tampa to the University of Central Florida in Orlando.

New Industrial Hot Spots

The flood of corporate capital into Central Florida isn't confined to Polk. From Tampa to Orlando to Melbourne and many communities in between, Corporate America is finding the I-4 belt to be the land of opportunity.

Sam Evans, project manager for International Corporate Park in Orlando, says that with both Orlando Central Park and Airport International Park of Orlando near build-out, the demand for industrial sites is shifting to Southeast Orlando and places beyond.

"We're running out of industrial land in key locations in Orlando," says Evans. "International Corporate Park was really the first project in Orlando after Florida passed its landmark Growth Management Act in 1984. With 3,000 acres [1,215 hectares], we have plenty of land."

ICP is cashing in. Correct Craft's 200,000- sq.-ft. (18,580- sq.-m.) boat manufacturing plant will open in ICP this summer, and a $14- million, 310,000-sq.-ft. (28,799- sq.-m.) WinDoor Inc. plant is scheduled to open May 15.

The WinDoor project retains more than 200 jobs and will add another 200 jobs over the next few years. The company specializes in the design and manufacture of hurricane-resistant windows and doors, products that have been in great demand since four major hurricanes slammed into Florida in 2004.

As in-town sites get scarce, Orlando's suburban markets rake in the growth. Orlando-based CuraScript Inc., a national pharmaceutical distributor, plans to build a $12.4- million, 65,000- sq.-ft. (6,038-sq.-m.) customer service facility near Orlando International Airport. The project will create 350 jobs by the end of 2007, bringing total employment at CuraScript to 1,000.

Staples, the office-supply retail chain, is opening a 555,000- sq-ft. (51,559-sq.-m.) distribution center in Orlando by the end of August, and Orlando-based Darden Restaurants recently announced plans to build a new $100-million corporate headquarters.

At the eastern end of the Florida High- Tech Corridor, ASRC Aerospace Corp. announced March 15 that it will add up to 1,000 jobs during the next several years at the Kennedy Space Center. The firm will work on projects aimed at assisting NASA's conversion from the space shuttle to a new space vehicle.

Most of the new ASRC jobs will be in engineering positions that pay up to $100,000 a year. The company currently employs 230 workers in Cape Canaveral and 700 companywide.

Based in Anchorage, Alaska, ASRC was founded by Inupiat Eskimos and began its operations in Brevard County on Florida's East Coast in April 2002. The firm competed for and won a $220-million University-Affiliated Spaceport Technology Development Contract from NASA in early 2003.

John Adams, president and CEO of Enterprise Florida, the state's public-private economic development agency based in Orlando, says jobs like those created at ASRC are vital to Florida's future.

"Gov. Jeb Bush has committed $250 million to attract high value-added companies like pharmaceutical firms and photonics firms," Adams said. "That is part of what we call the innovation value chain. It includes putting more state money into education, incentives and venture capital."

Adams notes that while Florida consistently leads the nation in job creation, the Enterprise Florida plan is to land the expected 14,000 high- tech jobs to be created by the new Crew Exploration Vehicle space program.

"Over 250,000 jobs were created in Florida last year. Over the last decade, Florida created more than 25 percent of the nation's new jobs," Adams added. "Orlando last year created more jobs than Michigan and Minnesota combined. But we are not content with that growth. That is why the governor is pushing his $630-million economic development package through the Florida Legislature this spring."

If that legislation passes, as expected, it will be the single-largest commitment to economic development ever made by Florida.

"People forget that we had seven hurricanes in 24 months and yet we still led the entire nation in job growth," said Adams. "No one is canceling their plans to come here.

Spreading the Wealth in the Sunshine State

The following is a brief overview of some of the more significant projects announced in Florida in past 12 months:

Ruth's Chris Steak House relocated its corporate headquarters from New Orleans to Orlando following Hurricane Katrina. After considering both Tampa and Dallas, CEO Craig Miller decided to move the firm's 50 headquarters employees and their families to Orlando. The firm chose new permanent quarters in Heathrow in Lake Mary. The 91-restaurant, 5,600-employee chain had 2005 revenues of $211 million.

George Livingston, principal of NAI Realvest Partners in Maitland, served as the site selection consultant on the project.

FedEx Ground next month will complete construction on a 215,000- sq.-ft. (19,973-sq.-m.) distribution warehouse in Pompano Beach. The $34-million project will add 150 jobs to the existing 356 in the area, according to Allison Sobczak, spokeswoman for FedEx Ground. "This will be a modern, automated facility that incorporates our latest package distribution technology," she said.

Coca-Cola last month moved into an 86,000- sq.-ft. (7,989-sq.-m.), single-story office building in Brandon in eastern Hillsborough County near Tampa. Duke Realty Inc. developed the back-office facility for Coke.

Trend USA announced Feb. 15 that it will establish its U.S. headquarters in Miami- Dade County. The Italian-owned company creates customized floor and wall surfaces with glass mosaic and agglomerate materials. The $15- million, 55,000-sq.-ft. (5,109-sq.-m.) facility will create 100 jobs.

Science Applications International Corp., one of the leading simulation companies in Orlando, announced plans to expand its Central Florida operations with construction of a $14.5-million, 80,000-sq.-ft. (7,432-sq.-m.) building and the addition of 300 workers. SAIC is located in the Central Florida Research Park near the University of Central Florida on the east side of Orlando.

Nordana Line (USA) Inc. announced Jan. 26 that it will move two of its regular cargo services from Savannah to Jacksonville, adding 25 jobs to Northeast Florida and generating at least 60,000 tons of cargo every year at JAXPORT's Blount Island Marine Terminal.

Burger King announced that it will expand its corporate headquarters in Coral Gables in Miami-Dade County with a $68- million capital investment.

Progress Energy broke ground recently in downtown St. Petersburg on a 16-story building that will house 510 employees currently working throughout Pinellas County. The office tower will be 200,000 sq. ft. (18,580 sq. m.) and represents a capital investment of $100 million.

Valpak is building a 500,000- sq.-ft. (46,450-sq.-m.) manufacturing facility that will house 1,100 employees in northeast St. Petersburg. The company is spending $43 million on construction, $135 million on equipment and $7 million on an information system.

Ryder System Inc. opened its new, four- story, 250,000-sq.-ft. (23,225-sq.-m.) global headquarters last year in Miami. The company employs more than 700 workers at the facility.

E-Stone USA Corp., an Italian- owned company, is locating a new stone manufacturing plant in Sebring in Highlands County. The $15-million investment will create 150 jobs and includes an 80,000-sq.-ft. (7,432-sq.-m.) plant.

XStream Systems Inc. is investing $10 million in four buildings in Vero Beach that will house R&D, production and headquarters facilities for the firm specializing in X-ray-based detection equipment. The expansion creates 546 jobs.

Haemacure Corp. is investing $10.8 million to expand its pharmaceutical manufacturing operations in Manatee County. The expansion creates 51 jobs.

Southeast Corporate Federal Credit Union is expanding its corporate headquarters in Tallahassee, creating 40 jobs and spending $5 million on facilities and equipment.