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Realizing Economic Opportunity in Port Cities
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Often, and as recently as yesterday, ICIC touts the importance of industrial assets to our inner cities for creating well-paying jobs and spurring business growth. Preserving industrial land in port cities is particularly important given global economic trends.
As noted in an ICIC blog post, these trends include:
- Productivity adjusted labor costs in China’s industrial heartland are rising 15-20% annually.
- Managing vendors and operations from halfway around the globe are making it more expensive to conduct business abroad.
- High employee turnover and inconsistent quality are increasing production costs.
- The price of crude oil has increased from $16/barrel to $100/barrel in just over a decade. Thus, it is more cost-effective for many firms to shift production closer to their headquarters and/or production base.
- Domestically, the bursting of the real estate bubble has reduced pressure by commercial and residential in some markets, resulting in more affordable industrial land.
If prepared, port cities are poised to reap the benefits of a comeback in manufacturing.
Newark, New Jersey is one of those cities actively investing in its port. A 2006 study conducted by ICIC, Opportunity Newark and the Newark Alliance found that Port Newark is a vital asset to the city—it is the largest port on the East Coast and the 3rd largest port in the country. Newark is a major hub for international and national shipping and distribution. Companies shipping from the Newark Port in to the United States have immediate access to 21 million consumers and, within a day, access to an additional one-third of the country’s population.
The Brick City Development Corporation (BCDC) – a nonprofit whose mission is to create jobs and wealth for Newark residents – has been integral to the Port’s revitalization. In a presentation last week, BDCD CEO Lyneir Richardson, explained the importance of real estate development to the Port’s success. Newark began by identifying the sites near its port that were prime for industrial redevelopment. The city chose 15 sites. BCDC’s goal was to close on 3-5 industrial sites in 24 months. To do so, they had to really understand the real estate: providing assistance with site selection, environmental issues, land control and entitlements.
BCDC used a variety of tools to meet their goal, including:
- Low-interest subordinate loans
- State incentives, such as the Environmental Infrastructure Trust
- Tax abatements and tax increment financing
- Gap financing
As a result, nearly 1 million square feet of industrial deals have closed since the BCDC strategy’s launch two year ago. There have been five recent groundbreakings in food distribution and manufacturing. For instance, the Wakefern Food Distribution Center recently opened. This 180,000 square foot, temperature-controlled facility is only 2.6 miles away from the Port. It has already created 120 permanent jobs for the city. A second phase is planned to create an additional 100k square feet building. Morris Lister is building a 337k sq. ft. warehouse and distribution center, partially thanks to $18 million in low-interest state loans. This project will create 200 permanent jobs asnd 700 construction jobs—again less than 3 miles away from the Newark Port.
How can other cities follow Newark’s lead?
Iain Vasey of the Baton Rouge Area Chamber offers the following advice:
- Understand the physical attributes and limitations of your port infrastructure (including what types of ships and containers the facility can handle)
- Establish a Certified Site Program which provides data on readily available land
- Know where your city is competitive in terms of taxation, operational costs, labor availability and cost basis
- Work with port leadership to understand their decision-making process, such as how land can be leased or sold, and for what terms
- Identify privately-held properties adjacent to ports and work with land owners to understand their needs—perhaps there are opportunities to bundle land
- Market specific sites for specific uses, and conduct targeted familiarization tours with qualified site selectors
- Guide proposals through the regulatory process
In fact, BCDC’s Richardson believes some hand-holding can go a long way. Take landowners, brokers, and developers on personal tours to show them your city’s viable industrial sites. After walking the city together, you will have built a relationship, making them more likely to choose your community for their industrial development projects.
In the interim, economic development officials should collaborate with local workforce development agencies to train community members for industrial jobs. The availability of a well-trained workforce cannot be stressed enough—as it is one of the most important factors in a site selector’s decision.
Are you in a port city (inland or seaport)? What is your city doing to support port growth?
You might also check the Trade & Industry article from Nov 2011. Here is the link:
By Fred Burkhardt on 10/10/2012
These new projects will create new jobs and help in building the economy.
By Logistics Solution on 10/23/2012
October 10th, 2012