The Dallas Morning News

California Firm Bets on Southern Sector Dallas County: Company Controls 6,000 Acres, Plans Logistics Park

27 August 2006

Henry Hubbard can’t quite grasp why a California developer quickly caught on to something that some of Mr. Hubbard’s Texas neighbors have seemingly ignored for years.

“You know, long ago I took a real estate course at UT, and they said all that matters is location, location, location,” said Mr. Hubbard, of Lancaster. “It’s sad that it took people from California to come in here and figure that out.”

And now that they have, The Allen Group is on the verge of taking over southern Dallas County.

With the purchase of most of Southport Center last week, the San Diego-based firm now owns or controls about 6,000 acres in the area. That’s bigger than Wilmer or Hutchins.

And if the project, known as the Dallas Logistics Hub, eventually grows to its projected 8,000 acres, it would be bigger than Duncanville, Bedford or Farmers Branch.

Mr. Allen said that the Hub – just in land and infrastructure – is probably worth about $500 million. He said that once the project is built out in 30 to 40 years, the Hub should be worth about $6 billion.

Gov. Rick Perry will join other officials Sept. 18 at the Lancaster Airport when The Allen Group officially breaks ground on the Hub.

But what is The Allen Group, and why has it amassed such holdings outside its familiar environs of California? And why would company officials choose southern Dallas County for the firm’s first foray away from its native state?

The short answer is that The Allen Group is a company that develops distribution, office and industrial properties within major interstate, rail and airport corridors. But the Hub – which will be the largest logistics park in North America and will eventually house more than 70 million square feet of buildings – makes anything the company has done to date pale in comparison.

Mr. Hubbard, one of the Lancaster landowners from which the firm bought a tract, said the company’s dealings make for interesting times in an area of Dallas County that has long been overlooked.

“Part of it is exciting, and part is disheartening,” said Mr. Hubbard, whose family farm dates back 80 years. “They could’ve built [Fort Worth’s] Alliance down here for a fraction of what they paid up north.”

Richard S. Allen, owner of The Allen Group, acknowledged that location was an important factor in deciding to jump into southern Dallas County. Mr. Allen said factors contributing to the shift in southern Dallas County from farmland to distribution crossroads were an available, but underemployed, workforce; major transportation arteries along three interstates, not including the future Loop 9; two rail lines; an airport; and an established foreign trade zone.

Mr. Allen would not disclose personal financial information about him or the business. Negotiating big deals like the Hub is not easy, Mr. Allen said, but there are ways to make the process go more smoothly. He said land and lease negotiations have everything to do with relationships.

“Developments like this are problematic. You always run into some problems with projects like this,” Mr. Allen said. “At the end of the day, the community has to trust The Allen Group. If they don’t trust us, we won’t be successful. Being from out of town and out of state is difficult, but when we first came to San Diego and Sacramento and the Central Valley, we were new, too. We hired local people.”

Similar strategy

The firm followed that blueprint in Texas. The Allen Group hired Leslie Jutze, a former Dallas city employee; Dan McAuliffe, one of the movers behind RailPort, a 1,700-acre development in Midlothian; and Jason Elms, an engineer who also worked on RailPort.

Ray Bishop, airport director in Kern County, Calif., has dealt with The Allen Group in negotiations surrounding that facility.

“They’re well-financed and well-led,” Mr. Bishop said. “They do the kind of development that belongs here. Now, they play hardball, but they’re fair.”

Not everyone agrees with that assessment, however. Dallas County Commissioner John Wiley Price, who represents that part of the county, has complained that The Allen Group hasn’t provided sufficient evidence of its record on minority participation in its projects.

“I’ve only asked one question. What is their minority participation record?” Mr. Price said. “It’s real peculiar that they can’t answer one question.”

City, county and economic development officials in California can’t answer that question specifically.

“We don’t get involved in micromanaging,” said Paul Saldaña, president and CEO of the Tulare County Economic Development Corp.

“I haven’t heard of complaints from contractors or the community, though.”

Mr. Allen said his company has minority-hiring goals in place and hasn’t had a chance to have a track record on minority hiring since it just started buying land in southern Dallas County this year. In addition, the companies The Allen Group has selected as finalists to design a Hutchins bridge have sizable minority interests, he said.

‘Down-to-earth people’

Ellen Clark, a longtime Lancaster businesswoman, said she believes that The Allen Group will be a good neighbor in all regards.

“They’re great, down-to-earth people,” said Ms. Clark, who has represented some of the landowners who sold property to The Allen Group. “They’re doing a lot to support the chamber and school district here. They are going to make this work and make themselves a part of the community, and the community’s going to be better off with them being here.”

The firm sponsored a golf tournament for the University of North Texas-Dallas, forged a workforce development partnership with Cedar Valley College and joined the Lancaster Chamber. Mr. Allen contributed to the campaigns of current mayors Joe Tillotson of Lancaster and Artis Johnson of Hutchins. Mr. Johnson said the firm will donate land on which Hutchins can build a fire station.

“This company is here for the long term. They’re engaged in a 30- to 40-year development process,” the Lancaster mayor said.

“Everyone in Dallas knows that if you don’t bring the southern sector into the economic fold, you will never have a world-class city. Iapplaud the Dallas leaders for recognizing that and working toward it.”

Family history

Though based in San Diego, The Allen Group – in business since 1991 – doesn’t have its roots in California. Mr. Allen’s father, Richard E. Allen, peddled candy and gum from the trunk of his car in rural Ohio. Mr. Allen said his 86-year-old father had an entrepreneurial spirit and created several businesses.

“He made 96 cents his first year in business,” Mr. Allen said of his dad. Most of those businesses were successful, but it was a vending machine cup business that soared. Mr. Allen did a little bit of everything in the business until he and his siblings decided to sell the company in 1989.

“We were doing $100 million in sales and had 800 employees when we sold,” Mr. Allen said. One of the company’s five plants was in Visalia, Calif.

“I was unemployed in 1990, but pretty well capitalized. I didn’t want to play golf or go to the beach, so I got into the real estate business.”

Now, he’s taking aim on southern Dallas County as he did on California’s Central Valley.

“I’m such a believer in” southern Dallas County, Mr. Allen said. “If you control the land, you control the development.”

TrafficWorld

Formica Leases in Inland Empire

22 August 2006

Formica Corporation signed a long-term lease on 98,000 square feet of distribution space in Shafter, Calif., in that state’s Inland Empire, where the surface products company expects to add 40 new jobs.

“Being in the right place to implement a regional distribution strategy is important in today’s time-sensitive markets,” said Edward B.

Romanov, president and COO of The Allen Group, from which Formica leased the property at Allen’s International Trade and Transportation Center.

The shipper expects its new Western Region distribution hub, relocated from Rocklin, Calif., will allow it to reach 25 percent of Western region customers in one day, and 99 percent of them in two days.

“Formica Corp. will now be able to reach a greater number of customers, improve service capabilities and enjoy the strategic advantage of being located in the San Joaquin Valley,” Romanov said.

The Shafter facility’s layout will also serve as a model for other Formica distribution centers.

The International Trade and Transportation Center is a master-planned 700 acre logistics park with Foreign Trade Zone designation and affiliation with the ports of Los Angeles and Long Beach.

GlobeSt.com

VF Corp. Inks 817,000-SF Industrial Build-to-Suit Lease

July 14, 2005

SAN DIEGO/VISALIA, CA-For its MidState 99 Distribution Center, the San Diego-based developer Allen Group has landed an 817,000-sf industrial build-to-suit lease deal. The tenant is a subsidiary of publicly held VF Corp., one of the world’s largest apparel companies.

“We’re very bullish on the San Joaquin Valley for big box distribution,”says Richard Allen, CEO of the Allen Group. He tells Globest.com that the area’s seen a paradigm shift in the past five years with Wal-Mart, Target and IKEA all agreeing to occupy million-plus-sf centers in the region, a big leap from the area’s agricultural roots.

MidState 99 Distribution Center is a 400-acre master-planned rail-served industrial development located on Highway 99, 45 miles south of Fresno, which is about midway between Los Angeles and San Francisco.

The new building being developed by Allen Group will be the Western distribution hub for VF Corp’s outdoor apparel division. The facility will feature 40-foot clear heights and 200,000 sf of mezzanine space. It will employ about 350 people when fully operational. Construction of VF’s new distribution hub will get underway next week.

The Allen Group will own the $43-million building. Terms of VF Corp’s lease were not released by the developer. The company would say VF signed a “long-term” lease. In addition, while the building is under construction, VF is leasing an existing 118,000-sf building in the park on a short-term basis. With sales in excess of $6 billion, VF Corp. is one of the world’s largest apparel companies. Its brands include Lee, Wrangler, Vanity Fair, The North Face, Vans, Bestform, Lily of France, Nautica, John Varvatos, JanSport and Eastpak.

While the Allen Group specializes in the development of rail served industrial parks and build-to-suit facilities throughout the western US, it’s making a comeback in its home area of San Diego. According to Allen, in 1997, the company sold its office portfolio to Los Angeles-based REIT Kilroy Realty Corp. for $350 million. Now that Allen’s non-compete agreement with Kilroy is finished, the developer is back to building its San Diego portfolio.

“We have a number of offices we still own and we’re completing a development project in Carlsbad,” says Allen. The Carlsbad project, known as Kelly Corporate Center already has 123,000 sf completed and leased. Countrywide, First American Title and Burnham Real Estate are among the tenants in a 73,000-sf multi-tenant office building. The California Department of Fish and Game occupies another 50,000-sf building for its south coast regional headquarters.

“In 30 days we’ll be breaking ground on a 73,000-sf multi-tenant building,” adds Allen. “And we have entitlements for another 50,000-sf build-to-suit.”

GulfShipper

Dallas’ logistics gamble

14 August 2006

UP plans depend on help from Houston, NAFTA highway Dallas and Houston clash over everything from business to sports to which city has better restaurants. Now add to the mix which has the better distribution and logistics network as the cities grapple for a greater share of containerized Asian freight and intermodal NAFTA traffic.

The intense intra-Texas rivalry is part of a larger battle that involves cities such as Kansas City, Mo.; St. Louis; Memphis, Tenn.; and even Indianapolis, all of which hope to use transportation and logistics assets to become the next big North American gateway for Asian imports.

However, Dallas will have to cooperate with its old rival if it wants to be the linchpin of a new NAFTA corridor. It needs containers from the growing Port of Houston to feed its nascent inland port. Likewise, a bigger and better hub to the north could drive more traffic to the Port of Houston, long the most dominant port in the Gulf of Mexico.

In fact, changing global logistics demands and distribution networks may drive Dallas and Houston closer together — whether they like it or not. The inland Port of Dallas, created through an agreement with the City of Dallas, the Houston Port Authority and the Maritime Administration, is an example. Industry observers wonder whether shippers need two major distribution hubs only 240 miles apart, or whether the Port of Houston and Dallas might be better off working together as one greater logistics “super-hub” served by the Trans-Texas Corridor or “NAFTA highway.”

Dallas hopes to become the place where East meets West — literally. It seeks Asian imports in containers shipped from Los Angeles and Long Beach and intermodal freight moving north from Mexico on the proposed $180 billion Trans-Texas Corridor or “TTC.” Key to Dallas’s aspirations are developments in southern Dallas County, where a new Union Pacific Railroad intermodal yard alongside I-45 is a magnet for logistics developers and promises to complement AllianceTexas and its Burlington Northern Santa Fe Railway hub and airport on the northwestern side of Dallas.

The UP facility is a critical part of plans for the Port of Dallas, which signed an agreement late last year with the Panama Canal Authority to encourage the shipment of Asian cargo through the canal and the Port of Houston to Dallas. Jon Cross, marketing director for Allen Group, a San Diego-based commercial development firm building a logistics hub near UP’s intermodal facility, said forecasts for long-term container growth and the region’s burgeoning intermodal capabilities suggest that within 10 years, Dallas will be one of the top two logistics markets in the country.

“There is so much happening in logistics and transportation in southern Dallas,” Cross said.

But skeptics note freight could flow as easily through Houston to points east and north, including Memphis, St. Louis and Kansas City, as to Dallas-Fort Worth. “I don’t think the concept of the Port of Dallas will ever apply, at least not in the way it was originally talked about,” said Ed Emmett, founder of consulting firm Emmett Co. in Houston.

Emmett, a former National Industrial Transportation League president and Interstate Commerce commissioner, isn’t convinced Dallas is a logical choice for a global trade center. He sees Dallas as a strong regional hub rather than a major inland port. It is unlikely that it will attract container traffic from Houston, as Houston is unlikely to send work and jobs north, he said. Others, however, argue that the inland port will relieve potential congestion at the Port of Houston.

Dallas also doesn’t make sense for Mexican traffic coming up along I-35, Emmett said. The roads and rails that pass through San Antonio and Houston are better situated, and those cities have closer cultural ties to Mexico.

Dallas-Forth Worth is in competition with lots of other cities too. In June, for example, Kansas City Southern announced that it would begin daily service between the Mexican Pacific Port of Lazaro Cardenas and Atlanta — itself a major intermodal hub — via Jackson, Miss.

Overdevelopment is a risk in the Dallas area, Emmett said. “I don’t think you can start building too many logistics parks,” he said.“They will eat into each other pretty quick.”

That’s not the word in south Dallas, where UP’s intermodal facility is a magnet for development.

“Developers are starting to take positions in south Dallas,” said Rob Huthnance, first vice president and Dallas market officer for ProLogis, a major developer and manager of industrial warehouses and distribution centers. “The area is very business friendly, there is less congestion and land prices are lower than in other parts of the region.”

To date, only the northern half of Dallas has been developed, said Bill Blaydes, Dallas City councilman and chairman of the Dallas NAFTA Coalition. Southeast Dallas County has tremendous development potential and the area is poised to emerge as the second major intermodal hub in the metropolitan area, he said.

UP opened its $100 million, 360-acre intermodal facility last September. Straddling the towns of Wilmer and Hutchins, the facility is designed to handle 365,000 containers annually and more than quintuples UP’s container capacity in the region. In January, the facility received its first Asian container shipment from the Port of Long Beach.

Allen Group is currently building a 6,000-acre logistics park adjacent to the UP intermodal yard. Called the Dallas Logistics Hub, the park has the capacity for 60 million square feet of development at a 35-year build-out. The project represents a huge commitment to the region for Allen Group, which has developed more than 50 commercial properties in the United States. It accounts for a major portion of the company’s total portfolio of 7,500 acres of land under development.

Lured by access to I-45, soaring land prices in the northern Dallas-Fort Worth area and the promise of an inland port, Indianapolisbased Duke Realty Corp. recently began construction of a speculative, 624,000-square-foot distribution facility adjacent to the UP intermodal yard.

The Dallas region has become a national distribution center for a growing number of companies, said Jeff Turner, Duke senior vice president. While about 95 percent of containers coming into the UP facility are from southern California, the prospect of increased NAFTA traffic via Mexican deep-water ports and the Port of Houston led Duke to expand its presence in the region; the new facility is the company’s first foray into south Dallas.

“We are trying to find the best of both worlds in terms of Asia and Mexico,” Turner said.

Duke opened its Dallas office in 1998 and now has approximately 40 Class A buildings totaling 9.3 million square feet. They are 96 percent leased. By 2010, the company hopes to have 2 million square feet of industrial space in the region.

The surge in industrial development is occurring as the largest road and rail construction program proposed since the creation of the Interstate highway system more than 50 years ago gets under way in Texas.

In 2002, Gov. Rick Perry announced a 50-year, $180 billion expansion of the state’s roadways and rail lines. Known as the Trans-Texas Corridor and unofficially as the “NAFTA highway,” the project would create a vast new network of passenger vehicle lanes, commercial truck lanes, passenger and freight rail lines and adjacent utility zones.

Much of the money for the TTC would be raised through tolls and fees, and parts of the corridor would be built and operated by private companies.

The project’s main roadway components are TTC-69, part of an eight-state, 1,600-mile highway that would connect Mexico, the U.S. and Canada, and TTC-35, a 600-mile, 1,200-foot-wide toll road that would extend from Mexico to the Oklahoma border north of Dallas.

In May 2005, the Texas Department of Transportation and Cintra-Zachry, a partnership of Spanish toll road builder Cintra and Zachry Construction Corp. of San Antonio, announced a 50-year master development plan for TTC-35. The first stage includes a four-lane, $6 billion toll road from Dallas to San Antonio and $1.2 billion for commuter and freight rail projects.

The plan also calls for a new 600-mile freight-rail line from Dallas to Mexico that could take up to one million trucks per year off of I-35. Road congestion is a huge problem in the Dallas-Forth Worth area and throughout Texas because of a fast-growing urban population and NAFTA-related trade.

According to the Texas Department of Transportation, by 2025, traffic in the state will have increased 132 percent and an average of 260,465 trucks will travel Texas roads each day. Already, 20 to 38 percent of current traffic on I-35 is attributed to commercial trucks.

In March 2005, Gov. Perry signed agreements with Union Pacific Railroad and BNSF Railway to work together to move freight lines out of densely populated urban areas.

“The Trans-Texas Corridor will provide unprecedented trade opportunities, a faster transportation system that moves freight and hazardous materials out of city centers,” Gov. Perry said.

But the TTC faces many hurdles before construction can begin. Opponents of the project attack the planned use of tolls, foreign investment in U.S. infrastructure and the massive use of eminent domain to acquire roughly 600 square miles of land for the project.

The proposed route would displace close to 1 million residents, half of them minorities; consume more than 2,400 square miles of prime farmland and 13 square miles of parks; affect the habitats of 46 threatened or endangered plant and animal species; include five federally recognized historic sites; and traverse nine aquifers.

A 4,000-page environmental impact statement released in April, prepared by the state DOT and the Federal Highway Administration indicated that the portion of TTC-35 between Dallas and San Antonio would be built east of Dallas, disappointing many in the city who want it to run parallel to the existing I-35. More than 50 public hearings will be held this summer to address the issue.

The proposed routing would cause major problems for the Dallas-Forth Worth area by failing to alleviate NAFTA-related congestion, said Blaydes. The fact that TTC-35 would be a privately operated toll road will also generate opposition. Toll roads pose problems for people in Texas and elsewhere, especially when states allow developers to set toll rates and designate exits.

“No one likes toll roads but it was considered the only way to get the highway built in our lifetime,” said Blaydes.

Developers with facilities near the UP intermodal yard want the road closer to Dallas. Cross said that it only makes sense to locate the highway “close to the action” and Turner said that it is important for the regions industrial base that TTC-35 be located as close to Dallas as possible.

Russell Laughlin, senior vice president of Dallas-based Hillwood, which operates AllianceTexas, said that future growth at AllianceTexas will come from Asian-based intermodal traffic shipped through the Ports of Los Angeles and Long Beach. While the highway component is important, the key to the success of the corridor is the proposed rail ring around Dallas-Fort Worth, he said.

Currently, about 50 coal trains move through the region; moving commodity trains to the perimeter would free up capacity for intermodal container growth.

“It would energize the region and position AllianceTexas for the next 25 years of growth,” Laughlin said.

California Builder & Engineer

New Corporate Center Construction

7 August 2006

Construction is wrapped up for Kelly Corporate Center IV, a new 77,500-square-foot concrete tilt-up office building within Kelly Corporate Center, located at 1000 Aviara Parkway in Carlsbad, California. San Diego-based Smith Consulting Architects is the project architect. The Allen Group is the project developer, with project manager Harve Filuk providing oversight. The joint venture development with the Kelly family is a four-phase, 21-acre, master-planned corporate office park, with Kelly Corporate Center IV as the third phase of the project.

Kelly Corporate Center IV comprises one three-story office building designed with flexibility to accommodate a single end user, or be leased as multi-tenant space. The building exterior features painted concrete with granite stone accents, and expansive use of high performance reflective bronze glazing. The interior finishes present a Class “A” building with a clean, classic and high-end appeal.

At its completion, the project will consist of four office buildings totaling approximately 250,000 square feet. Kelly Corporate Center I, completed in 2001, is a two-story, 72,000-square-foot multi-tenant office building. Kelly Corporate Center II, completed in 2002, is a two-story 50,000-square-foot office building developed for the U.S. Department of Fish and Wildlife.

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.

The Dallas Morning News

Tax roll sees 16 percent jump Dallas County: Credit goes to new construction, commercial market

May 26, 2006

For the second year in a row, a healthy commercial market and growth in new construction have boosted Dallas County property values, giving the county its highest increase in five years.

The preliminary tax roll jumped to $158.3 billion – up 16 percent from last year’s final certified numbers, according to the Dallas Central Appraisal District.

It included $4.2 billion in new construction – the highest in years. Slightly less than half of that came from commercial properties. Many cities saw double-digit percentage increases in property values.

The higher values translate into more tax revenue. That’s good news for cities and school districts, but not for property owners. The preliminary totals will drop significantly as many homeowners challenge their assessments.

County Budget Director Ryan Brown predicts that the county’s final number will drop to about $147.5 billion. Still, that would be 7.3 percent higher than last year’s certified tax roll. He expects that new-construction numbers will fall to about $3.4 billion. If so, that would translate into $5.2 million in additional tax revenue for Dallas County’s budget next fiscal year, he said.

“Every little bit helps,” Mr. Brown said. “They’re good numbers. They show solid growth across Dallas County.”

The county’s budget has been straining to cover pay for state- and federally mandated improvements to staffing, health care and cleanliness at the county jail.

The jail has failed inspections three years in a row, and the county is spending millions to replace medical equipment, pay for jail guard overtime and improve laundry service, among other things.

County Judge Margaret Keliher said that the numbers are encouraging and that she hopes the increase will allow the county to absorb additional spending without a tax rate increase next year.

“We know we have issues the county needs to address,” she said. “We would like to be able to do it without raising the tax rate.”

Chief Appraiser W. Kenneth Nolan said his office has received about 1,000 more property value protests than at this time last year. But he said he doesn’t expect an overall increase when the protest deadline arrives Wednesday.

Commercial properties make up 37 percent of the preliminary tax roll, but they account for about half of the overall preliminary tax base increase.

“I think the commercial market has seen somewhat of a renaissance in the last year,” Mr. Nolan said.

Outside forces often affect the market, he said. For example, institutional investors as well as out-of-state and foreign investors are driving the commercial market in Dallas because of their different expectations.

“In their mind, commercial real estate is still undervalued in the marketplace compared with other parts of the country like California,” he said.

‘Sorely needed’

Bernard Weinstein, director of the Center for Economic Development and Research at the University of North Texas, said that in some areas of Dallas County, homes are only now regaining the value they lost in the late 1980s. Mr. Weinstein said the value of his North Dallas home rebounded last year to what he paid for it in the mid-1980s.

“Last year was the best economy we’ve had in five years,” he said. “Economic growth and property valuations tend to go in the same direction. It’s sorely needed.”

Dallas’ 16 percent increase in property values was good news to city officials.

“We are pleased. We think it’s a positive indication of some of the programs and efforts we have put in place,” City Manager Mary Suhm said.

The city has made economic development a priority, and commercial development is on the rise, as evidenced by the construction cranes looming over downtown. The taxable value of commercial property is 24 percent higher than last year, although that number will drop.

“It also shows the economy in Dallas is steady and growing,” Ms. Suhm said.

Other Dallas County cities were experiencing similar gains.

After seeing its tax base plummet during the economic slump, Richardson’s base appears to be continuing a rebound that began last year.

“We’re pleased,” City Manager Bill Keffler said. “It’s showing a positive trend in the economic comeback.”

Preliminary totals were up 8.6 percent over last year.

Irving on the grow

Irving’s 18.1 percent increase can be attributed to a number of new residential projects throughout the city, as well as rising Las Colinas office occupancy rates and rents, said City Council member Rick Stopfer.

Recruiting companies to Irving, such as Fluor, is also helping to boost tax rolls, he said.

“It makes us feel good that … we stepped up to the plate and increased our emphasis on economic development and continue to bring new companies into the city,” Mr. Stopfer said.

“The things we’ve been trying to do the last five years are really starting to pay off now.”

Lancaster happy

Lancaster City Manager Jim Landon said his city is on an “upward climb.” Lancaster, a growing city in southern Dallas County, had about 22,000 residents in 1990.

Today it has nearly 34,000. About 10,000 housing permits have either been issued or are in the pipeline.

Nearly half of the 15.8 percent increase in value is from new construction, Mr. Landon said.

“The percentage of taxes collected from business is going up faster than residential, which should ease homeowners’ burden some,” he said.

Lancaster will use most of the added property tax revenue to hire more police and firefighters and to repair streets.

Ellen Clark, owner of Town Square Realty in Lancaster, said some appraisals show little rhyme or reason. One client’s home rose in value from $78,000 to $176,000 this year.

“That’s crazy,” she said. “They don’t look at people’s property anymore. They just can’t.” Ms. Clark said the price of raw land is soaring, too. The Allen Group – which owns or has

options on about 6,000 acres in southern Dallas County – and other developers could buy land at $7,000 to $9,000 an acre just a few years ago, she said.

“Now, you can’t touch anything for less than $12,000 per acre,” she said.

Dallas Business Journal

TxDot Approves $1.1 Million for Lancaster Airport

May 26, 2006

The Texas Department of Transportation has approved $1.1 million for improvements at Lancaster Municipal Airport.

The money will be used for an environmental assessment and the engineering and design work for a 1,500-foot runway extension, said Steve Filipowicz, executive director of the Lancaster Economic Development Corp.

The runway will be extended from 5,000 feet to 6,500 feet, Filipowicz said.

The total cost of extending the runway is expected to cost $9.05 million and be completed sometime between 2009 and 2011. The longer runway is expected to accommodate larger and heavier corporate jets. Lancaster’s airport, located in southern Dallas County, has seen unexpected growth in recent years. The city owned field is strategically located near the newest epi-center of logistics activity in Dallas — the $100 million

Union Pacific Railroad Co.’s intermodal rail yard and the Dallas Logistics Hub, a 5,000-acre industrial park that is in the early development stages.