Dallas Business Journal

BNSF Mulls Southern Dallas Intermodal

June 16, 2006

In a stunning blow to Hillwood’s master planned logistics park surrounding Fort Worth Alliance Airport, BNSF Railway Co. is studying the possibility of building a second intermodal yard in North Texas, this time near competitor Union Pacific Railroad Co.’s new $90 million Dallas Intermodal Terminal in southern Dallas County. BNSF is mulling more than 300 acres of raw land owned by California-based The Allen Group at the southeast corner of Interstate 20 and Bonnie View Lane, said Bill Blaydes, District 10 representative on the Dallas City Council.

The Fort Worth-based railroad could have a decision in less than five months. Assuming BNSF moves forward, it would take more than 36 months to get such a facility built and running, according to Van Cunningham, BNSF’s assistant vice president for economic development.

BNSF (NYSE: BNI) currently has a major intermodal yard at Alliance Airport, handling domestic and international rail freight. It competes aggressively with UP to win West Coast container shipments from the various ocean liner shipping firms.

“Long term, it’s not out of the question for us to have multiple facilities here,” acknowledged Cunningham, who hesitated to talk about the possibility. “We are looking at whether it’s a competitive advantage for us to go there.”

Fast-growing segment

Intermodal rail yards historically are huge magnets for warehouses and distribution customers.

Intermodal — shipping products by multiple transportation modes — is the fastest-growing freight segment in the nation’s rail industry due to a flood of Asian goods coming into the United States. Imports arrive in ocean-going containers, mostly through Los Angeles and Long Beach, Calif., and are lifted by giant cranes onto rail cars, then shipped to intermodal yards. Trucks then deliver the containers to distribution centers.

Ocean shippers tend to use one railroad exclusively for their shipments.

The Allen Group has an ambitious plan to develop its Dallas Logistics Hub, an industrial-office park on 6,000 acres of raw land around UP’s terminal.

If built out as planned and served by both of the nation’s major intermodal carriers, the Dallas Logistics Hub could prove a huge competitor to Hillwood’s Alliance development.

For BNSF to have multiple intermodal yards in one area is rare, but not unheard of. As part of its massive U.S. network of intermodal yards, BNSF has two in southern California, and three in Chicago.

BNSF entered confidential negotiations for a second yard in North Texas about a month ago, after receiving a proposal from The Allen Group.

The developer has proposed either building an intermodal facility for BNSF then leasing it to the railroad, or providing financing for BNSF to build it, Blaydes said. The I-20 site is about three miles, as a crow flies, from UP’s terminal. Allen Group officials didn’t return calls seeking comment.

Rise to prominence

A BNSF facility, should it happen, would be a huge home run for southern Dallas County. The area had been long ignored by developers until the 365-acre DIT opened in August off Interstate 45.

DIT’s instant success means volume there is up more than 20% over last year at UP’s older, smaller yard in Dallas. DIT is handling 1,000 lifts a day, putting it on track to handle 365,000 annually, according to UP. As a result, southern Dallas County is seeing a tidal wave of interest from builders of warehouses for logistics and distribution.

Because land is plentiful, developers, including the Dallas Logistics Hub, are swamping the small towns of Wilmer and Hutchins — where the hub is located — with never-before-seen interest.

Ironically, the family-owned Allen Group has said all along that it is patterning its hub after Hillwood’s successful Alliance development, but Hillwood chafes at the comparison, particularly since it will compete against the Dallas Logistics Hub for some of the same tenants.

The 735-acre BNSF facility at Alliance, which opened in 1994, handles 573,000 “lifts” a year, BNSF says. BNSF recently acquired additional land at Alliance and is expanding that yard. The facility can handle 1 million lifts, so still has sufficient capacity, Cunningham said.

In 2005, BNSF handled 5 million intermodal units nationwide. Its intermodal traffic has been growing close to 8% annually and represents 40% of its revenue. UP handled 3.5 million units in 2005, according to its Web site. Its intermodal traffic has been growing about 5% annually and represents about 19% of its revenue. Both Hillwood and UP declined to comment.

Dallas Business Journal

New Overpass Slated Near Dallas Intermodal Terminal

June 15, 2006

The vast expanse of land poised for development in southern Dallas County is crying out for more than $250 million in infrastructure. Developers around Union Pacific Railroad Co.’s massive Dallas Intermodal Terminal say they need everything from roads to water and sewer lines. Looks like they’ll soon get at least a little satisfaction.

Construction will start in nine months on a $5 million Wintergreen Road overpass over its intersection with Millers Ferry Road and UP train tracks at the north end of DIT.

Also in the works is similar overpass construction where UP tracks intersect with Pleasant Run Road at the sound end of DIT. The federally funded project should start construction in early 2008, according to Dan McAuliffe, vice president of development for California-based The Allen Group, the major developer around DIT.

The roads sandwich 6,000 acres of land The Allen Group is developing as the master planned Dallas Logistics Hub and are therefore considered dual “front-door” entrances.

Wintergreen’s funding and in-kind contributions are from Dallas County, the city of Hutchins, the North Central Texas Council of Governments, UP and The Allen Group, said McAuliffe. The cooperative effort was coordinated by Rep. Eddie Bernice Johnson, Dallas, he said.

“This project will demonstrate the willingness and cooperation of the communities and governments in south Dallas County,” McAuliffe said. “Congresswoman Eddie Bernice Johnson is the one who put this together and brought all the parties to the table. She brought us together and sat us down in a room, and we came to an agreement on what everyone can do.”

Wintergreen could open by spring of 2008, said Mike Sims, senior program manager for the Arlington-based council of governments. “It’s something we’re definitely trying to fast-track,” Sims said.

An existing four-lane overpass over Interstate 45 will remain, with new roadway starting at grade, passing over the tracks and Millers Ferry, then returning to grade, McAuliffe said.

Build Time Nears for 60M-SF Logistics Hub

GlobeSt.com
Build Time Nears for 60M-SF Logistics Hub
June 5, 2006

DALLAS-With another 2,000 acres in motion to buy and bank, the Allen Group is fast approaching a ceremonial shovel-turning for the Dallas Logistics Hub. The next round of deals, including 300 acres in Southport, will push the developer’s total to 6,000 acres to jumpstart a 60-million-sf vision for South Dallas.

If the San Diego-based developer’s schedule is held, the master plan will be before city officials in Dallas, Lancaster, Hutchins and Wilmer in August. The gala for the mixed-use project, though, is being planned for earlier in the summer at the Lancaster Airport, a Texas-style barbecue as the springboard for a Texas-size initiative.

The location and size of the first building, sure to be industrial, have yet to be determined, but the game plan is to break ground on the first spec space at the end of the year or early 2007, Dan McAuliffe, vice president of development for the Allen Group, tells GlobeSt.com.

“This is the result of a lot of folks’ efforts from the cities to the landowners to the Allen Group,” he says. “We are putting together what will be the premier economic engine in Texas, if not in the US.”

The Dallas Logistics Hub has grown into a legacy project and the developer’s largest undertaking in its 10-year history. And when the Allen Group’s done assembling and negotiating, it conceivably could be the only US “inland port” with two railroad-controlled intermodal bookends.

As the Allen team fine-tunes the master plan, executives confirm discussions have been held with Fort Worth-based Burlington Northern Santa Fe Railway Co. about building a second intermodal facility in the developer’s backyard. The Omaha-headquartered Union Pacific Railroad Co. is up and running with a 342-acre intermodal yard on the eastern side of the Allen Group’s land; the BNSF line crosses the western boundary.

Founder and CEO Richard S. Allen has spent nearly 2.5 years buying up and locking in South Dallas land, driving his competitors to jump into the fray with plans of their own while local officials mount the attack for Foreign Trade Zone and inland port designations. The pending Southport deal, though, could prove critical since it’s already FTZ-approved.

It’s a well-known fact that it takes less time to process an expansion application than it does a deal from scratch. Further fueling the logistical play is the City of Lancaster’s drive to extend its airport runway to 6,500 feet to accommodate cargo traffic.

The best-guess at this point is “the Hub”, as the team has christened it, will increase the four municipalities’ tax bases by $2.4 billion at full build-out. “Beyond being a key piece of the NAFTA Corridor infrastructure and strategically positioning Dallas as the number one trade hub in the Southwest region, the Dallas Logistics Hub, a milestone project, will have a significant, positive impact on the local communities, providing 30,000-plus jobs,” Allen says. The make-ready plan includes a workforce development program that’s being set up through Cedar Valley College in Lancaster. “We’re not just a developer who cares about building buildings,” says Jon Cross, the developer’s marketing director. “It’s important to the Allen Group as a developer that we embed ourselves as a member of the community.”

Cross says the Allen Group started another wave of land closings in February. He says the rest of the dirt will be in hand within months, but it’s not all about industrial development. He says the master plan will include an Interstate 20 gateway with office, retail and hotel space. “And then deeper into the Hub will be a lot of industrial, manufacturing and distribution buildings,” he says.

As the race continues for positioning, land prices are rising and key tracts are disappearing. The Allen Group, in fact, is holding a sales contract for an early takedown, 82 acres in Hutchins.

A decision has been made to focus on the west side of the interstate, driving the land into another developer’s hands.

“There are several major industrial developers that have positioned themselves in the submarket,” McAuliffe acknowledges. “That will no doubt provide strong competition for transactions in the early years. But long term, we believe the size of our land positioning in this submarket will put the Allen Group at a competitive advantage since we were first into the market.”

It’s no secret that the Indianapolis-based Duke Realty Corp. is going to be first out of the ground with space to show the crowd of tenants, many Fortune 500 companies, now sniffing around for a deal. “We’re anxious for someone to come out of the ground because we believe the success of that project will validate the location,” McAuliffe stresses. “We aren’t concerned about coming out of the ground first because we know we can be competitive at any point with that first building. We believe our land basis and assemblage will capture the vast majority of the deals in the market.”

Besides McAuliffe, the Texas team includes Leslie Jutzi, director of government affairs and community relations, and Jason Elms, director of engineering. For now, the team’s in an office in the Crescent in Uptown, but plans are afoot to lease space in Downtown until it’s time to go on site at the Hub.