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VOL. 38 | NO. 4 | Friday, January 24, 2014

Success brewing quietly in Wilson County

By Jeannie Naujeck

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What do Starbucks coffee, a hot tub and an ostomy bag have in common? No, it’s not the setup to an inappropriate joke. It’s an economic development question.

And the answer is that if you buy any of those products, chances are good they’ll spend some time in Wilson County en route to your house.

All are produced by companies with major industrial facilities in Middle Tennessee counties, and growing demand in the region for each product is helping Wilson County develop into a major commercial and residential center just a stone’s throw – or train ride – away from more well-established communities in Davidson and Williamson counties.

Four of the region’s five largest industrial facility sales were in the Wilson County and neighboring Southeast (Rutherford County) submarkets, according to Colliers International’s year-end 2013 Nashville area market report. (The other was the $51.5 million sale of Grassmere Office Park, considered part of the Southwest submarket.)

Wilson and Southeast also had the six largest leases in terms of square footage, most of them new. Wilson led the overall market in new occupancies, resulting in the biggest improvement in industrial vacancy rate among greater Nashville’s nine submarkets. Some of those projects were won from other counties, but others were the result of expansion of existing business.

840 and long-term planning

For example, CEVA Logistics had the Nashville market’s two largest leases of the year, and both were in Wilson County – a new lease to take over a 706,500-square-foot building and the renewal of a half-million-square-foot space next to it. The company provides warehousing, freight management and distribution services for other businesses.

Others were new, like Hollister Incorporated, a medical products manufacturer offering ostomy-care and related products, which leased a quarter-million square feet in the second quarter.

The area’s railroad also attracted higher-end manufacturing, such as an Italian plastics company that targeted Wilson County for its new 100,000-square-foot facility last year.

And Seattle-based coffee giant Starbucks also moved into a new 680,000-square-foot distribution center in Lebanon in the fourth quarter, with the promise of bringing 100 jobs to the county – though not a much-hoped-for retail café, which will likely come in the future.

The coffee purveyor also has a distribution center in LaVergne.

Hixon

“All that doesn’t happen as a result of what you did in one year,” says G.C. Hixson, executive director of the Joint Economic and Community Development Board of Wilson County, of the county’s success in attracting business.

Rather, it’s a result of long-term planning and coordination between the state’s commitment in building roads, such as 840, city and county development of water and sewer infrastructure, and good relationships with developers who can get sites built when businesses need it, he says.

One such developer, Industrial Developments International, is grading a large lot at 840 and Couchville Pike that could be the site of a one million-square-foot facility, in addition to more than 700,000 square feet it has already built across the road. The company will prepare the infrastructure in advance of selling the space, shaving months off the construction schedule.

“That’s been our secret, working with the developers, state funds, TDOT and things of that nature to get the infrastructure in that meets those demanding timelines of the clients,” Hixson says.

Office space needed now

Last year, a number of long-term projects converged in Wilson that totaled nearly three million square feet of new industrial space occupied and close to $173 million in investment.

Some projects were won away from other counties, but Hixson says much of the business is from growing companies like CEVA that already have a presence in Middle Tennessee, find it a great place to do business and have a massive appetite for space.

“Warehouse, fulfillment, those type of projects, they just demand such large buildings now,” Hixson says. “Over the last four or five years, they’ve gone from 200,000 or 300,000 square feet to double that and more.”

In addition to Amazon’s one million-square-foot warehouse in Rutherford County, there are new projects planned that require as much as 1.5 million square feet, he says.

Last week, Tennessee was named the top state in the nation for economic development by Business Facilities magazine, which cites the state’s strong activity in business recruitment and expansion.

In 2013, Tennessee brought in more than $3 billion of capital investment and nearly 7,000 new jobs just from its top five projects, in a mix of the automotive, heavy industrial, distribution, chemical and business services industries. The magazine cites Tennessee’s diversified growth strategy as a major reason for the win.

“There’s reasons companies come here – our location, a balanced budget, no income tax, low union rates … you don’t have to sell those, they’re just solid facts,” Hixson says.

“We’ll continue to get those looks. Locally, we just have to be prepared with our developers and tax structures locally so we can respond and be competitive and I think we will.”

Location plays role

Rutherford and Wilson counties, with their strategic locations along I-24 and I-40 and easy access to I-65, have long been favorable warehousing and distribution centers.

But population growth in Nashville and the Mid-South, and the changing nature of the way people shop for goods, also means there are more customers to serve and more companies looking for a central location from which to serve them.

In early January, online retailer Amazon.com announced plans to add about 500 positions in its 1 million-square-foot fulfillment center in Murfreesboro, part of the Southeast submarket that includes Rutherford County.

The center, which fills orders for small items including books and CDs, already has about 1,000 employees. Workers are paid hourly, and many receive benefits including stock in a company whose share value has more than doubled in the past three years. Shares of Amazon were trading at under $200 in January 2011 and are currently trading at highs of over $400 a share.

Lebanon has a “non-sort” Amazon fulfillment center – the type that doesn’t have a lot of conveyor belts because it ships out large items such as big-screen TVs, lawnmowers and hot tubs.

That center is growing, too. It had about 500 full-time employees before Christmas hiring doubled that number. About 200 of the seasonal hires have been retained.

With more Americans becoming comfortable with online shopping, and Amazon’s commitment to ever-shorter delivery times, Tennessee’s well-positioned for warehousing and distribution facilities that can ensure one-day deliveries.

“It’s just going to drive more of these centers. They have to be centrally located and central to the transportation network,” Hixson says.

“Fulfillment will continue to be strong and data centers that service those sites and maybe some corporate – there’s opportunities there.”

Opportunity does seem to be knocking on the door of a willing Wilson County.

New industry and job growth is fueling residential, corporate and office development in Mt. Juliet, where the planning commission has approved the building of nearly 500 homes in a lifestyle community on the north side of the city.

Nichols Vale will be a 150-acre, master-planned development executed by Pearl Street Partners and Crescent Communities, with groundbreaking this year.

Phases of the project should come online by spring 2015, and the influx of new residents willing to pay as much as $400,000 for a home will spark office and high-end retail and restaurant development.

The county has pumped money into its school system, and its oldest school is 9 years old. And close proximity to the airport, as well as light rail going into Nashville, will appeal to corporate professionals looking for easy access to the city.

The demographics are already changing, Hixson says, with the young, affluent set now giving Mt. Juliet a look.

“We will continue to be successful,” Hixson says. “We think we have a good future ahead.”

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