Developing a Build-To-Suit Facility To Consolidate Distribution

Oct. 1, 2008
This case history about Kloosterboer comes courtesy of Westfalia. It has been selected and edited by the MHM editorial staff for clarity, content and

This case history about Kloosterboer comes courtesy of Westfalia. It has been selected and edited by the MHM editorial staff for clarity, content and style.

Recently, Saalfeld Redistribution, a division of xpedx, an International Paper company, wanted to consolidate the activities of three distribution facilities into one “super facility,” and it was looking for a developer that could strategically partner with Saalfeld to get the job done. Parent company International Paper holds 16 leases with ProLogis for more than 1.5 million square feet in multiple markets, so ProLogis was the logical company to work with xpedx and Saalfeld.

“We started a build-to-suit project in the Cincinnati area, and we were looking for a partner to link up with for this very large facility," explained Frank DeLost, director of supply chain logistics for xpedx. “The first company that came to mind was ProLogis because we knew they would serve us best. We had established a relationship with them, and we knew they'd give us a facility that would be built to our needs and would be priced fairly.”

Choosing the most strategic location for Saalfeld's distribution facility was a critical decision that would impact the company's bottom line. Numerous issues needed to be considered before selecting the right site, including location, the configuration of the existing distribution networks, state-to-state tax incentive packages, local government regulations, short- and long-term workforce availability and existing lease terms.

"We defined a building need of approximately 500,000 square feet in the Cincinnati area. When we contacted ProLogis, they had two sites that were ready and were the right size," said DeLost. The sites that ProLogis provided to Saalfeld for consideration were located across the Ohio River from each other. One was located in northern Cincinnati, and the other was a 30-minute drive away in northern Kentucky. Both sites were situated near major transportation routes, but because they were located in different states, numerous tax and workforce availability issues needed to be analyzed.

ProLogis worked with Saalfeld to do a market-by-market analysis of the sites and determine which location would be most beneficial to xpedx's long-term growth plans. This analysis was critical in the pre-development phase of the facility location and planning. Because of this in-depth review of available local market resources, ProLogis was poised to identify, negotiate and achieve the maximum incentives and tax credit benefits for Saalfeld.

"ProLogis helped us work through which of the two sites would be the best for us – both from a state tax benefit and an investment perspective," explained DeLost. "Because we worked with them, we believe we found the best solution for xpedx to meet the demand in that market."

Ultimately, Saalfeld selected a 483,000-square-foot, build-to-suit facility in Hebron, Kentucky. This new regional distribution center is a showcase location for the company. Previously, xpedx handled regional and local distribution out of three facilities. Now, it routes all its regional distribution through this new facility, and with ProLogis' help, Saalfeld reconfigured an existing 180,000-square-foot space to handle its additional local distribution needs. welcomes relevant, exclusive case histories that explain in specific detail the business benefits that new software and material-handling equipment has provided to specific users. Send submissions to Mary Aichlmayr([email protected]), MHM Editor. All submissions will be edited for clarity, content and style.