Stretching the Metro

It's easy to go into the state of Mississippi without realizing it, as the rapidly growing communities of Southaven and Olive Branch, mere minutes from downtown Memphis, can attest. DeSoto County, Miss., is one of the fastest-growing counties in the country. Even the Purchase area of Kentucky and the bootheel of Missouri can feel the push of Memphis.
        "Memphis has always been a city-state," says Sid McMillan, vice president of business development with construction firm Yates Company's JESCO division. And true to its name, the far western Tennessee city might as well be an independent jurisdiction, so tied is it to the fortunes of several states.

Railroads Working Together? Get Out of Town Canadian National Railway employs more than 450 people in Memphis. It is one of the seven Class 1 railroads with intermodal capabilities and yards in the Memphis area, which sees traffic totaling 220 trains a day. Such activity is pushing at the outer limits of the railroads' current space arrangements, which means decision time is at hand for further growth options in the area.         Tight quarters sometimes breed collaboration instead of contempt, and such is the case with the new 3,000-acre (1,214 hectares) super terminal project being pursued by CN and CSX Intermodal. The new facility's 9,000 ft. (2,743 m.) of tracks and 1,800-spot trailer yard will serve a projected 200,000 lifts per year by the two railroads, and will replace CN's smaller Johnston Terminal, where the two companies also worked together.         "CN is the driving force" on the project, says Randy Richardson, deputy director of the Port Commission of Memphis and Shelby County, which owns the 8,500 acres (3,440 hectares) in Frank C. Pidgeon Industrial Park as well as the farmland and industrial land on adjacent President's Island. "We're hopeful that Norfolk Southern and BNSF will come in too."         However, just getting the first two players together was an arduous, four-year process, centering as usual on the specifics of trackage rights. The project will make an adjacent 800-acre (324-hectare) swath more valuable for warehouse/distribution development. Currently the area is dominated by a shuttered facility owned by Nucor Steel, formerly Birmingham Steel, adjacent to a Tennessee Valley Authority coal-fired power plant. The park as a whole has benefited from around $35 million in infrastructure improvements.         President's Island's first generation of industrial development began in the 1950s, and many of those tenants are still around, including the massive Cargill corn sweetener operation, a U.S. Navy testing facility and the state's only petroleum refinery, operated by Premcor. Around 1,000 acres (405 hectares) of non-floodable land is almost completely occupied by more than 150 companies, 50 of which have dock facilities. In 2001, the island shipped approximately 17 million tons. One reassuring factor to corporate interests is the guaranteed dredging of the slackwater harbor by agreement with the U.S. Army Corps of Engineers.

        In fact, with Alabama and Mississippi collaborating on an industrial park in the poverty-laden Black Belt, is it too much of a stretch to look for the same thing to happen in this tri-state nexus?
        "Mississippi and Tennessee have been looking at this for years, east of Memphis," says Mike Mullis. "There is a plan under way, and property identified to do that. You're going to see more of that, particularly on the automotive side."
        In the meantime, sophisticated distribution projects know no borders.
        "Our Future Electronics project in Desoto County, Mississippi is 240,000 square feet, which is not considered a mega-distribution project square-footage wise, but it has one of the more stringent floor tolerance and material handling requirements that we have ever undertaken," says H+M's Roger Cook.
        It's a change of state and of scenery when you cross that mighty Mississippi, into the Arkansas cities of Marion and West Memphis. Sixty percent of the area's residents work in Memphis, where they spend 60 percent of their disposable income, according to a recent retail study. But that figure pops up in Arkansas' favor in one respect: property taxes on the western side of the river are about 60 percent of those in Memphis.
        Union Pacific operates an intermodal facility on a 600-acre (243-hectare) parcel in Marion, where many shipments come in from the West Coast before doubling back to Little Rock. Five trains a day come in and two go out, "a microcosm of the trade deficit," quips Kay Brockwell, director of economic development for the City of Marion. Norfolk Southern and CSX pick up just outside the fence, and there's still room for BNSF to expand by another, yes, 60 percent. Currently, the facility processes 1,600 trucks a day, employing 180.
        Directly next door is the city's prized and almost-captured possession: the "Starbright" mega-site, right at the juncture of I-40 and I-55, that Toyota just barely passed up in choosing San Antonio, Texas earlier this year for its $800-million pickup truck assembly plant.
        The site's still there, all 1,600 acres (648 hectares) of it, part of a larger undeveloped area that comes to 5,500 acres (2,226 hectares). Only now it's planted with cotton instead of I-beams. In case anyone's still interested, however, it's 11 hours by highway to San Antonio, 4.5 hours to Princeton, Ind., and 6.7 hours to Georgetown, Ky. And as the search-and-locate process plays out among Toyota suppliers, several active prospects are looking beyond Texas borders, thus resuscitating Marion's temporarily deflated dream.
        Immediately adjacent, in the 27,000-strong city of West Memphis, several smaller firms have established operations: Union Pacific's automotive transloading facility; Family Dollar's southeast regional distribution center, and Skil/Bosch/Dremel Power Tools' 600,000-sq.-ft. (55,740-sq.-m.) operations. Adjacent to them is the gleaming and growing campus of MidSouth Community College, whose central mission is to work with industry and community in tandem, and a pronounced increase in residential development. All conditions seem ripe for industry, other than a critical mass of facilities themselves.
        "There are almost no available buildings of any significance in eastern Arkansas, but you'll see thousands and thousands of acres of farmland – for certain prospects, that's a wonderful option to have," says Jim Apple of the Memphis Chamber. "But many prospects are behind on their timelines, and moving into 200,000 sq. ft. [18,580 sq. m.] of building already built is worth a premium of some sort."
        "It's been difficult to get any big developers to go over there [Arkansas] and compete with Tennessee and Mississippi on their incentive programs," says Saig. But at the same time, "you have people who drive from Osceola to work in Memphis, about an hour and 20 minutes, all Interstate. It's not part of our metropolitan statistical area, but it's part of our market."
        Thus the region's players are half-battling and half-collaborating when it comes to corporate prospects. The Memphis package is driven by its PILOT program, Mississippi handles things at the state level and Arkansas makes up for its relative lack of incentives with lesser ad valorem taxes and greater volumes of very flat land.
        "Arkansas has all the land in the world – you can look over there and see it," says Saig from his office overlooking the Mississippi. The corporate prospects continue to do just that.