The Economic Impact of Warehousing and Logistics
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Economic Impacts of Warehousing & Logistics Economic Impacts of Warehousing & Logistics ACKNOWLEDGEMENTS AUTHORS Timothy S. Sullivan, Ph.D. John C. Navin, Ph.D. Warren D. Richards, M.S. Department of Economics & Finance Southern Illinois University Edwardsville School of Business PARTNERS Madison County Government City of Edwardsville Southwestern Illinois Leadership Council St. Louis Regional Chamber Economic Impacts of Warehousing & Logistics Economic Impacts of Warehousing & Logistics EXECUTIVE SUMMARY This report summarizes the role of the warehousing and logistics industry in the Madison County, Illinois economy, focusing on the county’s three large logistics centers: Gateway Commerce Center, Lakeview Commerce Park and Northgate Industrial Park. The most important findings are presented below with additional detail provided in the full report. 1. The three centers have a combined 4. The warehousing and storage industry annual economic impact in Madison represents nearly 4% of employment in County of over $1.3 billion. Madison County. The fraction of the county’s employment in this industry is 5.4 times the national level. 2. The presence of the three centers generates almost 10,000 jobs in Madison County and about $455 million 5. Employment in the warehousing and of annual payroll. Tenants of the centers storage industry has increased six-fold employ almost 6,000 workers and these since 2001, and total wages paid in workers have a total annual this industry have risen seven-fold. compensation of almost $300 million. 3. The three centers generate about 6. Multimodal freight activity in the $50 million of state and local tax Greater St. Louis area is projected to revenue annually. While the tenants increase by 74% between 2012 and qualify for various tax incentives, the 2045. Over 54% of the tonnage is combined property tax payment is projected to be shipped by truck (a 10 about $6 million each year. Income, percentage-point increase over 2012). sales, corporate, payroll, and property taxes paid by workers, tenants, and suppliers combine for an additional $44 million paid annually to the state of Illinois, Madison County, and local taxing bodies. Economic Impacts of Warehousing & Logistics TABLE OF CONTENTS SECTION 1: INTRODUCTION …………………………………….………………..…………………..1 SECTION 2: OVERVIEW OF THE LOGISTICS CENTERS …………….……………………...1 2.1 GATEWAY COMMERCE CENTER ……………………………………………………..1 2.2 LAKEVIEW COMMERCE PARK ……………………………………………………..….4 2.3 NORTHGATE INDUSTRIAL PARK ………………………………………………..……5 SECTION 3: ECONOMIC INCENTIVES AND TAX REVENUE ……………………….……..6 3.1 ENTERPRISE ZONES ………………………………………………………………………..6 3.2 TAX INCREMENT FINANCING DISTRICTS …………………………………….....9 3.3 FOREIGN TRADE ZONE .............................................................…...9 3.4 TAX REVENUES ……………………………………………………………………………..10 3.5 THE ECONOMY OF MADISON COUNTY AND THE ST. LOUIS MSA …………………………………………………………………….10 3.6 THE WAREHOUSING AND STORAGE INDUSTRY ……………...……………11 SECTION 4: THE ECONOMIC IMPACT OF COMMERCE CENTERS ………………….13 4.1 ECONOMIC IMPACT METHODOLOGY ………………………………………..…13 4.2 SUMMARY OF THE ECONOMIC IMPACT ……………………………………….15 Economic Impacts of Warehousing & Logistics Economic Impacts of Warehousing & Logistics SECTION 1: INTRODUCTION Over the past 36 years, Madison County, Illinois has seen dramatic growth in the logistics, warehousing, and transportation industries. This growth has primarily been fueled by the creation of large logistics complexes located in the area west of Interstate 255, along Illinois Route 111 and Illinois Route 3. Gateway Commerce Center, Lakeview Commerce Park, and Northgate Industrial Park include a combined 11 million square feet of warehouse space and have tenants that employ almost 6,000 workers. These centers are able to take advantage of their proximity to a sizable transportation network. The logistics centers’ locations provide ready access to the interstate highway system through I-64, I-55, I-255 and I-270. Multiple airports (Lambert-St. Louis International, St. Louis Downtown Airport, and St. Louis Regional) are located within 25 miles. America’s Central Port is within 20 miles, providing access to both rail and the Mississippi River. The commerce centers provide a major boost to the Madison County economy. This study will provide a quantitative estimate of the economic impact of Gateway, Lakeview, and Northgate on Madison County. This report will describe the centers, including brief summaries of their histories and a short discussion of the incentives available for the tenants. It will also describe the importance of the warehousing and storage industry and will provide an estimate of the economic impact of the three centers. SECTION 2: OVERVIEW OF THE LOGISTICS CENTERS 2.1 GATEWAY COMMERCE CENTER Gateway Commerce Center is the largest of the three centers in terms of acreage and employment. It is located at the intersection of I-270 and I-255, bordered on the northwest by Poag Road. (See Map 1). Most of the center is located in Edwardsville, but the western portion is in Pontoon Beach. Photo 2: Gateway Commerce Center Source: Google Maps 1 | P a g e Economic Impacts of Warehousing & Logistics Map 1: Gateway Commerce Center & Lakeview Commerce Park Source: Madison County Maps & Plats It was developed by Tri-Star properties beginning in 1998. Its first tenant, Dial Corporation, leased its building in April, 1998. The park’s other major tenants are Proctor and Gamble and Unilever. Gateway has over 2,300 acres of developable space and has benefitted significantly from the trend of large manufacturers consolidating their distribution space. In fall 2016, Gateway added a new Amazon fulfillment center with over 750,000 square feet of space. In addition to large scale warehousing, Gateway is also home to smaller packaging, distribution, and trucking companies. Table 1 below indicates Gateway Commerce Center businesses and the square footage of their buildings. 2| P a g e Economic Impacts of Warehousing & Logistics Current Tenant Building Number on Map Square Footage CDS (Custom Distribution Services) 3 812,000 Dial (Henkel) 3 812,000 WestRock Merchandising Displays 3 812,000 Axcess Hiring Services 3 812,000 Buske 2 361,826 GEODIS (formerly OHL) 6 411,272 Yazaki 6 411,272 Owens & Minor 2 361,826 Menasha Packaging 2 361,826 Staffing Synergies 2 361,826 Springfield Electric Supply 5 155,258 BL Logistics 5 155,258 Lewis Bakeries 5 155,258 PODS 5 155,258 CrossFit TenTwenty 5 155,258 Contegra 5 155,258 Walgreens 4 500,000 Sav-a-Lot 1 440,000 DB Schenker (P&G) 7 808,152 Menasha Packaging 8 518,406 Saddle Creek Logistics Services 9 672,000 GEODIS (formerly OHL) 11 395,910 USF Holland 14 54,604 Quality Packaging Speicalists International (QPSI) 15 656,752 Genco (Unilever) 10 1,260,028 DB Schenker (P&G) 12 478,752 Quality Packaging Speicalists International (QPSI) 13 1,131,452 WestRock (formerly RockTenn) 13 1,131,452 DB Schenker (P&G) 14 54,604 Genco (Hersey) 18 1,088,790 Turner Electric 17 65,478 Schneider National Carriers 16 23,636 No Current Tenant 19 624,150 Amazon 20 717,000 DB Schenker 21 214,890 No Current Tenant 21 306,090 Table 1: Gateway Commerce Center Tenants and Square Footage of their buildings. 3 | P a g e Economic Impacts of Warehousing & Logistics 2.2 LAKEVIEW COMMERCE PARK Lakeview Commerce Park is the second largest in terms of acreage and employment. It is located in Edwardsville at the intersection of Illinois Route 111 and New Poag Road. (See Map 1). It was developed in 1999, with its first property sold in 2004 to J.F. Electric. Lakeview has over 750 acres with approximately 350 acres still undeveloped. Word-Wide Photo 3: Lakeview Commerce Park Source: Google Maps Technologies moved into Lakeview in 2007 and expanded to a third building in 2008. Lakeview recently completed a $1.5 million infrastructure update, and in fall 2016, a new Amazon fulfillment center opened with over 750,000 square feet of space. Table 2 below indicates the tenants of Lakeview Commerce Park and the square footage of their buildings. Current Tenant Building Number on Map Square Footage OHL 1 604,712 Spectrum Brands 1 604,712 WWT 2 532,080 Telcobuy 3 1,062,735 Family Health Center 3 1,062,735 Amazon 4 769,500 Table 2: Lakeview Commerce Park Tenants and Square Footage of their buildings. 4 | P a g e Economic Impacts of Warehousing & Logistics 2.3 NORTHGATE INDUSTRIAL PARK Northgate Industrial Park is the oldest of the three centers. It is located in Granite City, west of Illinois Route 3, approximately one mile south of I- 270. (See Map 2). First established in the 1980s as part of an economic development outreach of Illinois Power, the center provides almost 700 acres of developable real estate Photo 5: Northgate Industrial Park Source: Google Maps Park. Northgate’s largest tenants include Gateway Packaging, Chestnut Health Systems and Heidtman Steel Products. Table 3 below indicates the tenants of Northgate Industrial Park and the square footage of their buildings. Map 2: Northgate Industrial Park Source: Madison County Maps & Plats 5 | P a g e Economic Impacts of Warehousing & Logistics Current Tenant Building Number on Map Square Footage Heidtman Steel Products, Inc. 1 174,520 Pre-Coat Metals 2 240,069 Air Products 3 7,125 HD Supply Waterworks 4 9,375 Chestnut Health Systems 5 34,500 OHL/Sears 6 354,688 United Steel Workers 7 21,660 Sachs Electric 7 21,660 One Source Equipment Rentals 7 21,660 Gateway Packaging Co. 8 120,976 Ehrhardt Tool & Machine, Inc. 9 69,500 John Sakach Co (Slingmax Rigging Solutions) 10 900 H&S Machine & Tools, Inc 11 11,317 Table 3: Northgate Industrial Park Tenants and Square Footage of their buildings. SECTION 3: ECONOMIC INCENTIVES AND TAX REVENUE 3.1 ENTERPRISE ZONES When the commerce centers were development incentives including the created, enterprise zones were the major following: incentive feature to spur economic Property tax abatement (of up to 10 years) development. Both Gateway and Lakeview Sales tax exemption on materials used are located within the Gateway to renovate or improve real property Enterprise Zone, which was designated Sales tax exemption on machinery and September 8, 1997 and is scheduled to equipment expire on December 31, 2027.