The New Frontier in Urban Development:Logistics and the Growing Demand for Distribution Centers
The New Frontier in Urban Development:
Logistics and the Growing Demand for Distribution Centers
Our partner, Robert Cavanaugh, is on the advisory Board for New Jersey City University’s new Logistics Center (the “Center”) in Jersey City which is part of the University’s Business School. Here is his “take” on why this is an opportunity for anyone with an interest in commercial warehouse development. The Center helps to prepare the students for the growing Logistics industry. The Center’s mission statement is: “…to advance workforce innovation through industry collaboration.
What is Logistics? In simple terms, logistics is the coordinated movement of goods from one point to another. The global economy has shifted the manufacturing base to lower cost markets such as Asia and South America but many of the goods they produce are consumed here in the US and the logistics industry is the method by which they are distributed to the consumer. For example, a TV made in China is transported across the ocean on a container ship. It’s then placed on a train or truck and transported to a warehouse. It can then be transported via truck or rail to other warehouses for local distribution or even directly to a consumer.
This whole process requires sophisticated coordination of people, buildings, machinery and equipment, including the precise tracking of the goods shipped. The jobs associated with this industry cover a broad spectrum ranging from typical warehouse operations to the more technical associated with engineering, computers and other fields required to ensure the entire system is well planned, coordinated and operates safely and smoothly. Representing these clients from a legal perspective requires a sophisticated understanding of many aspects of not only the industry but also land use and transportation laws on the Federal, State and Local levels.
We are all familiar with the internet and the ability it provides to easily search for information. Much of the activity that takes place on the internet is the search for goods which consumers then have shipped to their homes or businesses. The growth of “online” shopping has a direct correlation to the growing logistics industry. Every day, more and more people go to sites such as Amazon.com to purchase goods. Placement of that order is basically the next to last step for the purchased item to reach the consumer. There is an entire process, the logistics process, which occurs from the manufacturing plant to that item reaching the consumer. As online shopping continues to grow, the mechanism for the distribution of the goods purchased will also evolve. It’s already happening. Goods arrive at ports, such as Port Elizabeth, and are then shipped to large distribution centers which supply warehouses and which, in turn, distribute the goods to local stores or directly to the consumer. Large distribution centers can also be direct suppliers to consumers.
To simplify the difference in function between a distribution center vs. a warehouse, distribution centers generally do not hold goods for long periods of time. Large distribution centers tend to be regionally located and cover certain geographic areas. These centers and the warehouses they supply, rely on a massive trucking and rail industry to move the goods. As a direct result of online shopping demands, there is a growing need in the industry for more local distribution centers which will directly service the consumer in a specific geographic region. That translates into jobs, tax revenue and revitalized communities.
Understanding this industry as our firm does, not only its design and operational needs but complex issues such as traffic and neighborhood impacts, specifically in urban areas, is essential to providing effective legal representation for clients. The impact distribution centers can have on a local community are transformative! The loss of manufacturing jobs over the past 2 decades has been a significant factor in the decline of neighborhoods, especially in the inner cities. Waterfront communities, such as in Jersey City’s Gold Coast, have experienced a significant revitalization directly attributed to the jobs associated with the New York financial industry.
The inner city neighborhoods however, continue to struggle in what has become known as the modern day “tale of two cities”. Nonetheless, these neighborhoods often can be revitalized in relatively short periods of time with the development of a large distribution center. One recent example is the 887,000 sq. ft. Prologis Pulaski Distribution Center in Jersey City. This is a prime example of a successful coming together of business and government which has resulted in sorely need jobs and tax revenues.
Our firm was successful in helping put together comprehensive game plans to not only successfully achieve the client’s goals but also to address concerns and needs of the City and local community.
As I write this, the City is realizing over $1m a year in tax revenues on a property that was previously tax exempt, and over 500 new jobs are being filled through job fairs organized between the City and the Tenants. These are good paying jobs covering all aspects of the operations needed to successfully run this logistics network; they will enable individuals to improve their quality of life which in turn improves the quality of life in a neighborhood. In the movie Field of Dreams the theme was “build it and they will come”. It’s the same here, build these Distribution Centers, the jobs will come and neighborhoods can be revitalized. Working people will look for better housing. Developers will see this need and lots that now sit vacant will get developed with good affordable housing. All it takes is vision, leadership and a correlation between the development team, the community and the City leadership to make the vision a reality. As lawyers, having an acute understanding of logistics and Distribution Center operations is fundamental to providing effective legal representation to the client. It is also essential for addressing issues presented by governing bodies during the local land use process as well as the needs and concerns of the proposed Center’s surrounding community. Call and let us help you if you’re a developer or a prospective tenant with an interest in these types of commercial ventures.
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