Tax Breaks Pull PFSweb Across State Line

MEMPHIS-The bottom line has taken PFSweb across the state line. Occupying close to one million sf of facilities here already, the Texas-based third party logistics provider has signed a three-year lease for another 435,000-sf of distribution space located seven minutes down the road–in Mississippi, where DeSoto County officials offered a better deal.While the triple-net lease rates between in Shelby County, TN and DeSoto County, MS, are virtually identical for new high-cube space–between $2.80 and $3.00 per sf per year–PFWweb’s broker Wyatt Aiken tells GlobeSt.com that the tax breaks offered by DeSoto County drops PFSweb’s total annual occupancy cost by $0.50 to $0.70 per sf compared to neighboring Shelby County. That savings is what drove the decision, he says.”If you’re new to town, you’re likely to get tax abatements for certain things for a certain number of years that you won’t likely get in the town you are already in,” says Aiken, a broker with Commercial Advisors LLC in Memphis. “As a result, it is very attractive for distribution in Memphis to consider (crossing the border into) Mississippi and gain the tax benefits without leaving the Memphis MSA.”A representative of Shelby County could not be reached for comment on the situation. Aiken says part of the problem is that PFSweb in Memphis is located in the digs of its former parent company, Daisytech, which received a tax break for its facility before it went bankrupt. While Shelby County wasn’t ready to offer new incentives for it to expand, “the State of Mississippi is saying ‘come on down here and we’ll give you one,’” says Aiken. Looking forward, Aiken says PFSweb CEO Mark Layton will consider moving its existing Memphis operations to DeSoto County as leases there expire. “There’s a little bit of a scuffle between these two border counties,” says Aiken. “The real story is, is this the first of many [companies to shift operations across the state line] or will Memphis be able to woo them back?”Meantime, PFSweb is planning to invest up to $5 million in its new facility at Atlanta-based IDI’s Airways Distribution Center in Mississippi. The facility, which will employ 100 workers, is being launched to provide services for a new Fortune 500 consumer products client that it has yet to name. The facility will be up and running in the first quarter of 2005, providing services such as inventory management, fulfillment, integrated reverse logistics and transportation management.All told, PFSweb currently warehouses, manages and fulfills about $1 billion annually in merchandise and transactions from its distribution facilities in Memphis, Toronto, Canada and Liege, Belgium.