f you're moving goods, you're moving the economy. How else to explain that seven of the top 10 U.S. states for total corporate facility projects in 2007 are also in the top 10 for distribution and warehouse projects? Or that the sector accounts for nearly 20 percent of all U.S. facility projects?
   Here are the top states in attracting corporate facility projects with a distribution component between January 2007 and February 2008, according to the Conway Data New Plant Database:
   Of the 120 U.S. logistics and distribution projects totaling US$20 million or more in capital investment during the period from Jan. 2007 through February 2008, 14 were in Texas, 11 in Illinois, 10 in Ohio, nine in Florida, eight in Pennsylvania, seven in Indiana, six in Iowa (out of 18 total), five in Nebraska (out of seven total) and four each in New York and Tennessee.
   Central to all of the above are the port and train-truck transload complexes that serve them.
   In early March, Class I railroad Norfolk Southern officially opened its Rickenbacker Intermodal Terminal, part of the Rickenbacker Global Logistics Park near Columbus, Ohio. It will anchor the railroad's Heartland Corridor, a three-year project scheduled to be completed in 2010 that is expected to significantly increase the speed of containerized freight moving in double-stack trains between the East Coast and the Midwest, says the railroad. Currently, double-stack trains must take longer routes by way of Harrisburg, Pa., or Knoxville, Tenn. The Heartland Corridor goes across Virginia, through southern West Virginia and north through Columbus. In addition to ensuring height clearance along the new pathways, the $250-million Corridor plan includes significant dredging at the Port of Virginia.
   "The opening of the Rickenbacker Intermodal Terminal is a milestone for the area's logistics industry, and we congratulate Norfolk Southern on this exciting accomplishment," said Elaine Roberts, A.A.E., president and CEO of the Columbus Regional Airport Authority (CRAA). "We have already witnessed the start of the intermodal terminal's economic impact with new industrial development in the Rickenbacker area. We expect 20,000 new jobs over the next 30 years as a direct result of the new intermodal facility."
   Designed to handle more than 250,000 containers and trailers annually, the complex has existing expansion capability as well as options for adjacent property uses such as container yards. It will be served by six trains daily: four between Rickenbacker and Chicago and two between Rickenbacker and Norfolk, Va.
   According to an independent study, within 10 years the new intermodal facility will generate $660 million in transportation cost savings to shippers, and over the next 30 years, will generate 9,500 direct jobs and 10,900 indirect jobs.
   "Growth in rail capacity is a key driver of enhanced distribution solutions, and Rickenbacker is about to increase truck to train lift capacity by almost 400 percent," said Jolene Molitoris, chairwoman of the Ohio Rail Development Commission. "The synergy of Ohio's location advantage to 60 percent of Americans and 50 percent of Canadians within 600 miles [965 km.] in conjunction with improved rail and international shipping access in the center of the state is definitely a boon for our logistics industry."
   It's a boon for Norfolk Southern too. In fact, the railroad had lost some business as it operated beyond capacity at its existing Columbus operations. Rickenbacker, says Solomon Jackson, manager of real estate for Norfolk Southern, will increase that capacity tenfold, and allow Norfolk Southern to recoup some of that business.
   "We commend the Columbus Regional Airport Authority for its vision, tenacity and partnership in bringing this facility to fruition, and for its awareness of the vital role intermodal transportation can play in economic development," said Wick Moorman, Norfolk Southern's CEO.    Tenacity indeed was what it took to bring the project to fruition on its 175-acre (70.8-hectare) parcel, for one simple reason: No matter what economic impact figures may say, people don't want trucks and trains for neighbors. For corroboration of any given Class I's experience in this realm, just review the implementation of any recent intermodal project, most of which, by their nature, need to be located in a metro area. They include CSX's in Winter Haven, Fla., which is now facing a new set of concerns raised by residents and elected officials.
   "An intermodal yard in a residential area is not an easy thing," says Norfolk Southern's Solomon Jackson. He says the project was more than 10 years in the making, remembering talk of it when he came to the railroad in 1999 from his position as a liaison with the governor's office. First considered as a purely railroad-funded venture, the project was back-burnered due to other corporate funding priorities. But the idea of a public-private partnership structure brought it front and center again in early 2004.
   "By the time [the] real estate [department] was brought in, there was already a footprint discussed, and a strategy put together," says Jackson. "The group assembled seemed well on its way. But the moment I took a look at the plan, it became crystal clear it was not going to work. It didn't make a lot of sense to buy only the property you needed to build it, and not consider the ramifications for the adjacent property owners. That's where the resistance came, and it was very prevalent."
   Van Baker, who until his April retirement was assistant vice president of real estate for Norfolk Southern, says Jackson's past liaison work therefore was ideal preparation for shepherding this project.
   "He has a great deal of experience working in public-private projects and with people who don't necessarily agree with your views," says Baker.
   "The crowd was hostile," affirms Jackson. "I remember being in the backyard of one of the owners where all the other neighbors had assembled – it was a tough environment. If they had had tomatoes or eggs they could have thrown at us, they would have."
   So a lot of real estate time was spent winning over the community, one square foot of respect at a time.
   "A lot of folks felt the railroad and port authority hadn't been forthcoming with information, and so they were very reluctant. As time went on, we demonstrated we knew what it means to be a good corporate citizen."
   He says the property purchase happened in two phases, with six property owners classified as core and about 25 as non-core.
   "The six owners said we could not get their core properties unless we dealt fairly with the other 25," he says. Once that evidence was present, things moved forward.    The mighty dollar helped us as well. Jackson and Baker say the railroad paid the appraised price at the very minimum, and Jackson emphasizes that "a lot of the heavy lifting" on the negotiations was done without resorting to eminent domain, or taking powers, which never entered into the discussion.
   "Money didn't hurt, but it wasn't initially about the money, it was about 'What type of community are you guys going to leave us?'" says Jackson.
   The legal and due diligence requirements attached to being a public-private venture directly affected those prices.
   "After the fact, the six property owners said Norfolk Southern set the price by making statements in the press about how much money we lose by failing to grow," says Jackson. "It is extremely difficult to buy property when you've told the public, 'This is what we plan on doing, and this is the price.' We had to be very forthcoming with information, and we gave the public all that information and then some. It made the environment for purchasing property challenging.
   Jackson cites the standard sticking point at 10 percent above appraised value by agencies appraising public property.
   "I'm proud we were able to negotiate every property we needed for this facility and didn't have to resort to eminent domain," he says, though the overall spend was slightly higher than originally planned.
   Nevertheless, a few property owners held out for bigger prices. "We elected not to buy those properties," says Jackson, "and I think if you talked to them today, they'd say they made a mistake."    Past mistakes by railroads over the decades when it has come to heartless relocation and taking of property appear to be headed toward the dustbin as surely as steam locomotives.
   "We agreed to allow the original 25 property owners to stay in their homes, should they decide to, and we would pay off their mortgages, and give them less than market rental on the homes," says Jackson. " 'If you want to stay here until the facility is up and running and see if it really disrupts your life, you can do that.' I would say more than half stayed. A few have slowly moved on, but a number of them say to this day, 'Why in the world, with my mortgage paid off and the amount you're charging us to stay, would I leave?' We've given them a period of five years to decide."
   Jackson says one key to progress was the ability of non-real-estate partners on the project to take a step back and let the real estate experts deal. The logic behind taking a certain amount of trucks off the road didn't hurt either.
   "There was so much skepticism," Jackson says of the project resisters. "The mood changes came in when we said, 'Give us a chance and we'll prove you wrong.' It was little stuff – going to meetings, returning phone calls. It may have seemed insignificant at the time, but it started to build trust and support."
   Baker says turning the corner on this kind of community relations may be the best thing he's done in his 40-year railroad career. And the work certainly isn't over.
   "We have a project going on right now – a future intermodal facility – that involves some property owners who are elderly," he says. "We're trying to work with their children to make this transition, either by moving their house somewhere close by, or letting them stay in a similar environment. It's not like the old railroad, which would just go in there, flash a lot of cash, and say, 'You have 30 days to get out of here.' We are sensitive to special situations."
   Jackson says the Columbus project "is one to hang your hat on" when it comes to public-private partnerships, because so many of the affected parties were involved. A perfect illustration? Every key Congressional delegation represented him or herself at the grand opening.
   "That, to me, spoke volumes about how important the partnership really is," says Jackson. "We hit a lot of singles in the railroad. A few times we strike out. But this one was clearly a home run."    Whether trying to get in front of it as an alternative or in back of it as spin-off, ports across the spectrum are positioning themselves for the expected completion of the Panama Canal expansion in 2014.
   The play is not just to be a choice versus the canal or because of it, but also versus the exorbitant congestion and costs associated with the U.S. West Coast ports of Long Beach and Los Angeles. Companies first started looking to diversify their logistics bases from there when confronted with the longshoremen strike in 2002. Since then, other issues – among them simple land and facility shortages – have accelerated that search.
   The latest strike came in early 2008, when the California state legislature considered a measure to implement fees in the form of a "sin tax" on goods-movement-related emissions at California ports.
   Anthony Chiarello, senior vice president of customer development for AMB Property Corp., and a former president of logistics for Maersk, says it's bad enough already.
   "We looked at added fees on the West Coast on imports and came up with $200 per container of new fees projected to be levied this year," he says. "At some point, importers are going to say, 'Hold it.'"    Alternatives are putting their best foot forward. Mexico's Port of Lazaro Cardenas (see p. 342) has steadily been building structures and visibility among global shippers. In March it signed an agreement with Port San Antonio in Texas that extends the logistics corridor relationship they established three years ago. Among the shippers reportedly taking advantage of the Mexican port is H-E-B (H.E. Butt Grocery Co.), which the port says has saved $100 per container by switching from Long Beach to the Lazaro Cardenas route for shipments emanating from Ningbo, China. H-E-B spokespersons declined to be interviewed for this article.
   Port San Antonio is a 1,900-acre (769-hectare) logistics park on the grounds of the former Kelly Air Force Base. It enjoys a Foreign Trade Zone designation, which also was recently accorded to fellow Texas mega-logistics project the Dallas Logistics Hub from the Allen Group, as FTZ #39 was expanded to include it.
   Intermodal projects are part of Port San Antonio's plan too, including the $60-million East Kelly Railport that opened in June 2007. Instant spin-off has come in the form of multiple warehouse projects from Titan Industrial Development, part of a logistics boom in the city that saw 1.8 million sq. ft. (167,220 sq. m.) of new industrial space come online in 2007.
   In the Pacific Northwest, one of the projects taking shape in this realm is the South Sound Logistics Center, part of the Port of Tacoma's five-year, $953.6-million capital improvement program focusing on expanding terminal, rail and road capacity. Wilma Warshak, senior vice president of Colliers International, led a project site study for the ports of Tacoma and Olympia. She says rail is coming to the fore in the region's logistics landscape. And, as with Norfolk Southern in Columbus, she says the project's site search planning takes on a lot more than real estate.
   "I knew how sensitive the project was going to be," she says. "We didn't want to look at it from just a real estate point of view, but with more sensitivity, in a deeper way."
   The team included two engineering groups to assess topographical and wetlands issues. Jacobs Engineering was brought in as well, in order to help ascertain which sites could best handle 8,000 lineal feet of rail. Then the project went to market. Warshak says the project needs a minimun of 600 acres (243 hectares), evenly split between the railyard and space for distribution facilities. But the search included properties as small as 500 acres (202 hectares) – "so we didn't miss anything," says Warshak – in parts of Pierce, Thurston and Lewis counties in reasonable proximity to the ports.
   Other criteria included a minimum of 50-percent flat ground, wetlands comprising no more than 40 percent of the land and reasonable proximity to I-5.
   "It's all about access," she says. "Most DCs want to be within one mile [1.6 km.], and within a maximum of 10 miles [16 km.]. We also wanted proximity to an active rail line."
   She says the team stayed away from anything that had more than 10 ownerships, and from really small sites of under a half-acre, "because we were concerned we could get into housing by accident. And we wanted to make sure the land was not substantially improved. We also didn't want rail infrastructure to cross I-5, for obvious reasons, and we didn't want military land."
   The search got down to a short list of 15 to 17 properties, then to just a few. The team then did a preliminary land acquisition cost analysis, "because you don't know what residual value might be of some of the property, i.e. gravel," says Warshak. As it turned out, the recommended site was where the Port had already purchased property: a 745-acre (302-hectare) site in Maytown, near Olympia, that was bought for $22 million in 2006.
   As with other logistics projects across the continent, opposition has been vocal. As of press time, a rezoning measure was due to be considered by Thurston County officials that would effectively kill the larger project, but still permit a small rail-truck transfer complex. Meanwhile, the inter-local agreement between the two ports expires in June, making a decision point imminent.
   According to a January 2008 analysis conducted for the ports by Heartland, "between 1994 and 2004, container traffic grew at an average annual rate of 3.7 percent at the Port of Tacoma and 2.6 percent at the Port of Seattle. Conservative forecasts for Washington State international container traffic indicate a tripling of volumes from 2.8 million TEU in 2002 to 6.9 million TEU in 2025."    More than 50 percent of Asian imports are now coming to the East Coast. With the Panama Canal expansion due to be complete in 2014, the sky's the limit for ports east of that isthmus, especially with the added factor of new import streams coming from the other direction, through the Suez Canal. Robert Morris, director of external affairs for the Georgia Ports Authority, says the Port of Savannah just added two more shippers from the Suez direction in the past six months, bringing the total to six.
   Asked if he sees demand for port-proximal manufacturing space coming back because of the dollar's devaluation, AMB's Chiarello says his firm asked the same question recently of CEOs whose companies use the Panama Canal. "Across the board, they said, 'No,'" says Chiarello. Although there is a shortage of containers for export, he says most exports from the U.S. right now fall in the bulk or commodity categories.
   The Canal expansion's influence extends beyond simple TEU counts. Asked if his port's environmentally friendly initiatives include providing plug-in capabilities for berthed ships, Morris says, "There is a break-even point of about 18,000 TEU where it generates more emissions to turn it off and back on than to leave it running." However, he adds, "We will do it once we get the Panama Canal expanded." The port is also rebuilding one of its major berths, and continues to work on meeting the dredging requirements of the federal government.
   "We are finishing the work required by the Corps of Engineers to get their final approval," said Doug Marchand, executive director of the Georgia Ports Authority, in March. "We expect that to be completed early next year. It's critical that that project be started and finished by the end of the Panama Canal expansion. We know we can have it finished by 2012."
   Chiarello and other AMB executives were in Savannah in March to celebrate the launch of the 3.3-million-sq.-ft. (306,570-sq.-m.) AMB Morgan Business Center logistics complex, which lays claim to LEED leadership as well as location in its pitch. Chiarello says by 2011, container vessel capacity will grow by 67 percent, or around 16 million TEUs, worldwide. Around 900 vessels out of the global fleet will be post-Panamax in size. AMB chose Savannah for many reasons, he said, including its ability to serve a 26-state region as a distribution hub and the fact that it's the only U.S. port seeing double-digit growth (13.6 percent in 2007).
   Steve Kros, AMB's vice president of development for the east region, compared costs at the company's project in Savannah to L.A./Long Beach and to New York/New Jersey.
   "Anybody looking for 500,000 square feet [46,450 sq. m.] is going 60 miles [97 km.] inland," he said of the California ports, "versus 10.7 miles [17.2 km.] here. If you were to find space, it would be for $10 per sq. ft, which is $5 million." At the New York/New Jersey ports, he said, asking rates hover around $8 per sq. ft. In Savannah, he said, the same tenant is likely to pay less than $2 million in rent per year, with the added benefit of uncongested Interstate systems next door on I-16 and I-95.
   By 2015, the throughput capacity at GPA's Garden City Terminal is projected at 6.5 million TEUs, an increase of more than twice today's capacity. In February, the port welcomed four post-Panamax cranes from China to help get ready for that increase. But it's not all one-way.
   "Another key factor for the Port of Savannah is nearly balanced trade," says Chiarello. "Many other ports are not seeing that same balance. It means solid opportunities for steamship lines to move freight both ways."
   But the shadow looming over all is the Canal expansion, which means the passage will go from handling a maximum vessel capacity of 5,000 TEUs to a maximum of 12,600 TEUs.
   "The ability to service larger vessels is a significant, significant opportunity," said Chiarello.
   Norfolk Southern's Heartland Corridor is aiming for 2010 for the same Canal-related reasons. So are port projects in Jacksonville, Charleston and other less heralded southeastern locations. In April, BPG Properties announced it would locate the 975,000-sq.-ft. (90,578-sq.-m.) logistics center in Leland Industrial Park, approximately 10 miles (16 km.) from the growing Port of Wilmington, N.C., which has four new post-Panamax cranes of its own.
   Jeff Moseley, president and CEO of the Greater Houston Partnership, says the Canal expansion "will open up the Port of Houston more so than it already is to China and to Asia. That's why you already see Wal-Mart opening up a 2-million-square-foot [185,800-sq.-m.] facility on the Houston shipping channel. The Panama Canal expansion has Port of Houston written all over it."
   But wait: It also has a label that says, "New Orleans." That's where the Port of New Orleans is planning for public and private investments totaling $574.4 million through 2012 and another $465.1 million between 2013 and 2020. Short term, around $25 million from the state's budget surplus is expected to go toward expansion of that port's Napoleon Avenue terminal. Also part of the plan is a $25-million intermodal facility, to be built by the telltale year of 2013.