Northeast Florida will likely benefit from the state’s deal with Amazon.com Inc.
Gov. Rick Scott and Amazon officials have announced a deal in which the online retail giant would invest $300 million and create 3,000 jobs in Florida.
In recent years, Amazon (Nasdaq: AMZN) has embarked on an ambitious same-day delivery strategy, opening regional hubs near major population centers. Given the breadth of Amazon’s deal with Florida, the Sunshine State will probably see multiple Amazon centers, and one will almost certainly land in Northeast Florida.
The fulfillment centers the company has opened throughout the U.S. have averaged a million square feet, and most have been new, ground-up construction. The Jacksonville area has one vacancy that could accommodate that space requirement — the NorthPoint Logistics Center on the Northside — and no shortage of available land for such a project.
“If you look at a state as big as Florida, with its population distribution, you would certainly think Northeast Florida would be in the mix,” said Mark Scott, senior director of the industrial group at Graham & Co. in Jacksonville.
Digging into the deal
The state hasn’t yet unveiled the incentive package it will offer Amazon. Hillsborough County officials followed the governor’s announcement with their own, as the county is already negotiating incentives for Amazon in exchange for creating 1,000 permanent jobs, 375 of which would pay $47,581 a year, 15 percent above Florida’s average wage. Those salaries qualify Amazon for Florida’s Qualified Target Industry tax refund incentive.
Amazon is already under construction on three fulfillment centers in Texas that will create a combined 1,000 jobs, so if Jacksonville lands one, it could mean more than 300 jobs. Two of those centers are being developed by Texas-based Hillwood Development Co., the master developer of Jacksonville’s Cecil Commerce Center. But one real estate executive said that relationship doesn’t mean nearly as much as the company’s logistics and delivery strategy.
“Amazon will locate where Amazon wants to locate,” said Peter Anderson, vice president of Pattillo Industrial Real Estate in Jacksonville. “They’re not going to locate anywhere because of a particular developer.”
Anderson said his firm owns land that’s entitled for a million square feet, and a number of other properties could also accommodate a development of that size, including Imeson Industrial Park, some of Norfolk Southern Corp.’s properties and Cecil Commerce Center, the naval air base-turned-business park on the Westside.
There’s also a possibility, Anderson said, that Amazon could look to Baker County, as Wal-Mart Stores Inc. (NYSE: WMT) did when it built a $40 million distribution center there in the early 2000s.
Rural counties like Baker have access to additional incentives through the state’s Rural Economic Development Initiative, or REDI, program, that metropolitan areas like Jacksonville and Duval County don’t.
A boon for Jacksonville?
After years of stagnation, Jacksonville’s industrial real estate market saw a boost in activity in 2012. The vacancy rate dropped below 11 percent for the first time in years, but that same activity didn’t prove sustainable into the first half of 2013.
“We in the business keep waiting for this market to totally turn around,” Scott said, “and when you look at the underlying factors that influence our economy, it’s clear that we are not in full recovery yet, and I just don’t think we’re going to see a whole lot of that until there’s some more certainty coming out of our federal government.”
Industrial deals, especially distribution centers, are based on a company’s logistics strategy, not synergy with other companies, Scott said.
“Amazon coming here, in and of itself, doesn’t necessarily mean others will follow,” he said. “But it certainly makes the statement that the environment in Jacksonville is certainly a great place for their business, and others will probably take note.”
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