The plan, however, remains tentative. In conjunction with the sale transaction, BNSF and the San Diego-based developer entered into an option agreement giving the railroad the right to purchase an additional 164 acres, which would need to be activated for the intermodal facility to move forward. But the Fort Worth-based rail company remains noncommittal about its intentions. "We are not able to discuss terms, nor are we discussing any plans we have or don't have for that parcel," says BNSF spokesman Pat Hiatt. "It's basically a real estate transaction. That's all I can say."
The reluctance to commit appears to be caused by uncertainty over the need for yet another facility in the market. BNSF already has a 735-acre intermodal facility at Hillwood's 17,000-acre Alliance development northeast of Dallas that has not reached its one million-lifts-per-year. It also acquired additional land at Alliance for eventual expansion. Allen Group corporate marketing director Jon Cross honors the railroad's ambivalence but points out the site's location makes an intermodal center there all but inevitable from a logistics standpoint. "People in general are starting to understand that massive highway and rail infrastructure that exists and the future infrastructure that will come in place makes this the region's natural logistics hub," he tells GlobeSt.com.
The Dallas hub is one of four intermodal centers the Allen Group is developing. Next year it will open the first buildings at Logistics Park-Kansas City, a 997-acre project in Gardner, KS with 418-acre BNSF intermodal facility. It also has the 700-acre International Trade and Transportation Center in Shafter, CA and 480-acre Midstate 99 Distribution Center in Visalia, CA. Cross calls intermodal probably the most important trend in logistics today.
"More and more distribution companies want to put their facilities as close as they can to intermodal facilities to cut down on drayage costs," he explains, noting that a Grubb & Ellis study of major national retail companies found that logistics expenses account for 10% of retailers' total expenses and that transportation costs make up 60% of that 10%. "What that says," he continues, "is that savvy companies are not choosing locations because of cheaper land or cheaper buildings. Rather, they are looking for locations where they can reduce transportation costs."
He notes it could cost $200 to truck a container from the railyard to a distribution site across a typical metropolitan area compared to $70 to get it from the train to a distribution site within an intermodal center. With one of today's one million-sf distribution centers handling some 12,000 container deliveries per year, locating near an intermodal center can mean annual savings of $1 million to $2 million.
All of the Allen Group's intermodal projects are located a couple hundred to several thousand miles away from seaports, which Cross considers another significant trend. The underlying stimulus is explosive trade growth. The exec points out the US had $84 billion worth of trade in 1970 but this year passed $84 billion by the second week of January. "Look at every major port. There's congestion, the cost of land is outrageous, there's no room to grow and most buildings aren't efficient. By taking the port and effectively moving it to an inland destination via rail, you have the chance to spread out," he says.
Intermodal centers also provide opportunity for large private developers to compete in a landscape increasingly dominated by REITs, Cross adds. "Companies like the Allen Group, Hillwood and CenterPoint [Properties] have patient capital," he says. "We can take large chunks of land for the long-term hold. That's a niche business for us where we can be very competitive with REITs. That's why you keep hearing of the Allen Groups, which may not be as large as the public companies but are financially capable of going in and making something like this happen."
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