BOONE COUNTY: Distribution/warehousing still rule

BOONE COUNTY Distribution/warehousing still rule Duke looking to rail potential in Lebanon while Whitestown heats up

LEBANON-The economy might be slowing like a down-shifting Mack truck, but Boone County’s economic development engine of warehousing and distribution keeps accelerating.

The sector now accounts for more than 25 percent of the tax revenue in the county seat of Lebanon. Its growth has been so strong that some longtime residents worry the county is overlooking other sectors.

“I know a lot of communities would die to have this,” said Marc Applegate, a Boone commissioner and 50-year county resident, adding: “You need diversity in your job market. You need economic diversity. It’s really important.”

Of course, new business is a good problem to have these days, and nobody is shaking a frozen fish stick at the pending addition of a U.S. Cold Storage warehouse at the 1,000-acre Lebanon Business Park.

The New Jersey-based storage firm is contemplating more than 400,000 square feet on roughly 60 acres at the park just west of Interstate 65.

To haul its frozen foods in and out, U.S. Cold Storage wants a rail spur built to the massive park from the nearby CSX Railroad line. The bigger picture is that such a spur could open the Duke Realty Corp.-managed park to other rail-intensive businesses, including manufacturing.

“This will be the only park I’m aware of in [the region] that can provide brand new, state-of-the-art distribution buildings that are rail-served,” said Charlie Podell, senior vice president of Duke Realty’s Indiana industrial business.

The Indianapolis-based developer opened the Lebanon park in the mid-1990s. It was the company’s first giant leap into industrial development in the area since launching Park 100 in northwestern Marion County in 1972.

The Lebanon park employs nearly 3,000 and is home to Boone County’s largest employers. They include Case New Holland Logistics, with 737 employees; Hendrickson Trailer Suspension Systems, 358; Pearson Education, 294; and Hachette Book Group USA, with more than 270 employees.

About 43 percent of the work force is from Boone County, said Lebanon Mayor John Lasley.

The Boone County Economic Development Corp. commissioned accounting firm Katz Sapper & Miller to conduct an economic impact study of the Lebanon Business Park, with results likely to be released within 30 days. Like most local governments chasing high-value development, the warehousing and distribution boom around here has been fueled in part by tax breaks that phase out over a decade or so.

That’s unless, of course, a big-box tenant announces an expansion; that often leads to another round of incentives.

Recently, an attorney for Duke told the Lebanon City Council that park tenants pay $3.5 million a year in property taxes and provide wages of $90 million a year.

U.S. Cold Storage would be the first tenant in a 250-acre plot Duke wants to develop within Lebanon Business Park. The timing appears opportune, given the improving economics of rail transportation relative to trucking as fuel prices rise. Rail generally is most economical for moving commodities in bulk.

“Diesel fuel costs have thrown a real wrench into transportation,” Podell said. “Rail would lend itself for a major manufacturer to come in.”

The rail portion of the park could fit another 3.5 million square feet of buildings. Currently, the park has 6.5 million square feet under roof and hosts the majority of Boone County’s existing warehouse space.

The Indianapolis region’s reigning warehouse location, Plainfield, has upwards of 22 million square feet under roof.

More on the way

Boone County already has a number of other warehouse/distribution centers, including Perry Industrial Park in Whitestown.

Among more recent tenants in Whitestown is Subaru of America, with a 282,000-square-foot regional parts distribution center in Park 267, a joint venture of Indianapolis-based Browning Investments and Denver-based ProLogis.

Another is Pitney Bowes, which moved into 182,000 square feet of space.

And near the existing Perry Business Park, a joint venture of Indianapolis-based Denison Properties and Opus North Corp. is working to land the first tenant at Whitestown Business Center. The 125-acre park will accommodate anything from 100,000 square feet to 1 million square feet, said Opus North Vice President John Cumming. He expects a mix of build-to-suit and speculative facilities. The developers in Whitestown note not only the quick access to I-65 but also the potential of State Road 267’s becoming effectively an outer beltway to Interstate 465, with the road’s connection to interstates 74 and 70 in Hendricks County.

And then there’s Duke Realty and Browning Investments’ AllPoints at Anson, a mixed office, industrial and residential behemoth in Whitestown spread over 1,700 acres.

It will include a 318,000-square-foot automated pharmacy complex by New Jersey-based Medco Health Solutions. This and several other projects announced over the last year in Boone County amount to 15 million square feet of new industrial product, mostly in the form of modern bulk space, according to a report by the local office of St. Louisbased Colliers Turley Martin Tucker.

And in March, Amazon.comannounced plans to open an order fulfillment center at Anson in a 618,000-square-foot facility Duke had already developed. Amazon could employ upwards of 1,200.

Meanwhile, the city of Lebanon has annexed 600 additional acres of land ripe for growth. The city also is annexing 3,655 acres bordering I-65, south of town, all the way down to Anson, in Whitestown.

Lebanon Mayor Lasley said annexation gives the city, among other things, oversight of development to ensure the city can support future growth.

Like much of central Indiana, Boone is linked to multiple interstate highways and is one-day’s drive to most of the nation’s big cities. It’s not as close as Plainfield is to Indianapolis International Airport, but its land is cheaper. Tax incentives also have helped, of course.

“We’ve had a lot of momentum, even in spite of a slowing economy,” said Kristie McKillip, executive director of the Boone County Economic Development Corp.

Mix it up

Bring it on, but make sure Boone County has a healthy mix, urges Applegate.

According to data kept by the Boone County Economic Development Corp., transportation and warehousing jobs paid an average of $32,168 in 2006.

That contrasts with almost $47,000 for those in professional and technical services, $44,148 for finance and insurance, and $53,048 for some manufacturing jobs.

Applegate, of Zionsville, is quick to cite the value of homes needed to support school corporations, based on their current budgets. If there’s an influx of disproportionately lower-paying jobs, “that puts additional burdens on the rest of the taxpayers” for supporting public services, he said.

Applegate said he has great hopes for Anson and is encouraged by new tenants such as Medco and its automated pharmacy. Applegate knows Duke faces pressure to fill the park to satisfy its shareholders, but it would be nice to be “picky” to get the best companies, he said.

“We’re in such a great location, I think we need to be patient, especially with the Anson project,” Applegate said.

McKillip told Boone commissioners in February that the economic development group has established a biotechnology committee, to look into what the county can do to lure businesses that pay higher wages.