As Distribution Centers Grow, Corporate Users Risk More NIMBY Protests

By John Salustri

Who speaks for the corporate tenant when a new distribution center is planned for a local community? The short answer is: Everyone, from the economic development corporation (EDC) and the community leaders to the corporation itself. 

But this collaboration assumes that there’s been adequate homework by the appointed site selectors and service providers to ensure–as much as possible–that the local community is indeed the right fit for the project at hand. 

“There needs to be a more transparent dialog,” says Dan Grant, senior VP of Kimley-Horn & Associates, Inc. in Dallas. “The potential corporate citizen needs to share more information, such as how the project will provide a more vibrant community. But does the community want more jobs, and if so, what kind of jobs? Understanding the city’s comprehensive plan is very important.” And, he says, it’s up to the EDC primarily to answer those questions. 

“The EDCs are in a unique position to be the voice of corporate users to the local communities,” agrees Jim Eckert, leader of Corporate Real Estate for Owens Corning in Toledo, OH.

At IAMC’s recent Fall Forum, the signature session, Info Exchange, tackled the issue of distribution center growth and NIMBYism head-on. It was brought out that, according to CBRE statistics, there are some 862 million square feet of distribution center space currently in the pipeline of 60 of the country’s top metro areas. 

No wonder. One major driver of this growth is the spike in online shopping. According to Digital Commerce 360, in Q3 of this year alone, online activity rose by 10.8%. 

https://www.digitalcommerce360.com/article/quarterly-online-sales/

“It’s the way of the world today,” says Lockheed Martin Director of Economic Development Julie Dow. “We want everything immediately, but we don’t want any of the negatives that go along with it. There’s got to be a proper balance.”
 

Defining Growth

“Involved industry professionals have to understand what makes up the economy of the local community and how the community sees its growth strategy,” says the Fort Mitchell, KY-based Lee Crume, president and CEO of Northern Kentucky Tri-ED. “A billion-dollar chip fabrication or battery plant will not happen for every community.”

What’s also commonly overlooked is that these projects deliver more than a temporary impact. “When we put facilities up, we’re in it for a long trajectory before they’re obsolete,” says Eckert. “That can mean 60 or 70 years.

“We’re trying to make our facilities more reusable and resilient,” he continues. “But our plants are basically machines with shells around them. So how can we do that differently so the building itself becomes reusable after we’re done? That’s our challenge.”

That decades-long presence also raises the question of the local area’s plan for reusable energy. “I’ve never had anyone tell me how we can harness the grid around renewable energy transformation,” he says. “Also, how can we ensure that that infrastructure will be there and be reliable?”    

Another issue, of course, is perception. To uninformed citizens, manufacturing still calls up images of belching smokestacks. The fears mount with images of pollution–whether it be by noise, exhaust or even lighting, “since many operations are 24/7,” says Grant.

To state the obvious, these issues are largely things of the past. “The majority of the population doesn’t understand today’s distribution or manufacturing environments,” says the Palm Beach, FL-based Dow. “They don’t understand that the jobs we offer are higher technology. You can practically eat off the floor of today’s manufacturing plants or warehouses. They’re super clean, environmentally conscious and ergonomically designed for the workers.” 

Those reality-challenging perceptions raise their heads when the public hearings begin. Frankly, says Crume, “The local population often has no time or bandwidth to fully consider the benefits or challenges.”

When they do have the bandwidth, the challenges increase. “Let’s say I come to a community with a plan for a building that’s taller than the local code allows,” proposes Grant. “There’ll be a public hearing, and the city council will approve or deny the application, often without the knowledge of its benefits.” 
 

Taking the Reins

So, who takes the lead? Grant suggests that EDCs are too often outward facing, focused on bringing a company in rather than informing the local gentry about the benefits that come with it. 

“The cities–the urban planners–are responsible primarily,” says Eckert. “We know what we need for our business. In my view, it’s not our job, nor are we sufficiently positioned, to know what’s right for the city. There’s far too much ‘selling’ to the companies that want to come in as opposed to creating the platforms that ensure the needs of developers and tenants are met in a way that has a positive, sustainable impact on the community.” 

“It’s a fair comment,” says Crume. “More work needs to occur. We need to understand the language of the business client, the elected official and the community.”

But the whole process has to start with the real estate service providers, in Crume’s view: “I suspect most corporate users are talking to them first. But there’s an obligation the EDC has to quickly communicate to both the provider and the client that this is either a great economic opportunity for everyone or it’s not.”

As for the corporate user, the prime responsibility is supporting the overall strategic growth of the company. That implies a reliance on the service providers, the local governments and the EDCs. 

“They’re being driven to make good decisions for their company,” says Crume. Through their local advisors, “they become attentive to these other factors that make a locale a good fit. No matter how good the spreadsheet looks, if the community doesn’t want that investment, it won’t be a good program.”

And here it stands to reason that community education by the corporation, through the offices of its local advisers, can go far. But timing, through such means as press releases and news coverage, is critical. No one, after all, wants picketers outside their construction fences. “We can all participate in educating the local population,” says Crume. 

“A positive release from the EDC can work,” says Dow, “but you have to be careful.” Making news, even positive news, can arouse the attention of competitors. It can also awaken local landowners to the fact that a deep-pockets corporation wants to move in, giving rise to price hikes. “There can be harm done if it’s announced too soon. Put the plans in place early so at the appropriate time you can hit the ground running positively with press releases, job postings and the like.”

Grant notes that the most resilient municipalities “strike a balance where the tax burden is equally distributed between those who live and those who work and those who play. And every city has a different balance.”

If there is a commonality, says Crume, it’s that “Everybody wants their groceries today, and that’s not about to change. To accomplish that, greater community education is key. The keywords are balance, coordination and education.”