July 2007 | Commentary | EcoDev

Real Estate, Logistics, and Politics Converge

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Legendary baseball philosopher Yogi Berra once said, "90 percent of the game is half mental." In the development world, 90 percent of real estate is half logistics.

As shippers increasingly examine ways to make their global supply chains reliable and diversified, they look to infrastructure improvements to support their plans.

Because globalization has added length and multiple transport modes to the supply chain, developers have become increasingly involved in issues that are literally thousands of miles from their projects.

Real estate professionals have had to educate themselves on global trade routes, seaports, rail lines, TEUs, canals, and ocean vessels. They need to understand the effect a congested West Coast port has on a distribution center in the central United States, and how a bottleneck in Iowa or Missouri can disrupt the supply chain all the way back to the ports.

Another realization for today's development executives is that they must work closely with logistics professionals, as well as the public sector at all levels - city, county, state, and federal - to address the country's transportation infrastructure issues.

Infrastructure needs have never been more critical. Inland ports that demand optimal rail, highway, and in some instances, airport connections, have become an integral part of moving goods from overseas.

This trend will continue to grow as U.S. population centers move south and west across the country. Case in point: 24 of the 25 fastest-growing cities with a population of 100,000 or more are now located in the South and Southwest, according to a recent report of population estimates from the U.S. Census Bureau.

In addition, seven of the 10 largest U.S. cities reside west of the Mississippi River.

Making the Connection

Developers and logistics professionals alike must help political leaders understand the connection between public investment in transportation infrastructure and economic development.

At Hillwood's Alliance development in North Texas, for example, various government entities have spent approximately $324 million in infrastructure improvements over 17 years of development.

The project generated a $28.5-billion economic impact, including $6.1 billion in private investment, more than 25,000 jobs, and nearly a half-billion dollars in property tax revenue.

U.S. Transportation Secretary Mary Peters clearly sees the connection between transportation infrastructure and logistics, as well as its importance to our current economy.

The Secretary visits a major logistics hub on the first Friday of every month in conjunction with the government's monthly job-growth announcements. She also led the recently announced initiative to provide unlimited cargo flights between the United States and China starting in 2011.

When knowledgeable political leaders partner with industry, we get the best of both worlds.

One successful example is North America's SuperCorridor Coalition (NASCO). This coalition was formed to help address issues related to infrastructure improvements in the region; its mission is to provide secure and efficient routes to move goods throughout the Interstate 35 corridor between the United States, Canada, and Mexico.

As these initiatives show, traditional real estate transactions can no longer be the industry's sole focus. Today's logistics hub and inland port developers must realize their responsibility to work with a variety of entities to help their customers find better, faster, more secure, and less costly means of moving goods to their facilities.

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