Commercial Real Estate, Capital, Insurance, Leasing & Management

Laying Down the Tracks for Rail-Served Site Selection

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Larry Kahn says meeting project timelines is essential for site selection in any industry, especially for rail projects.

Excerpted from Area Development story.

The power of our nation’s railroads may not be obvious to the average American, but rail impacts all of our lives in one way or another. For more than 150 years, trains have efficiently and effectively delivered essential goods across the continental United States. These products, which include coal, grain, fertilizer, plastics, building materials and countless others, are staples of our economy and touch the lives of every American on a daily basis. Even with the advent of new forms of transportation, such as planes and automobiles, rail is not losing steam. 

But the most significant import that rail delivers is not the food products or fertilizer that helps feed our population and support our agricultural needs. It’s not even the coal that fuels many aspects of our economy. Trains deliver economic vitality. In 2017 alone, U.S. freight railroads helped produce $220 billion in economic activity and supported the jobs of 1.1 million Americans, according to a study by Towson University. The economic impact of rail is particularly noteworthy because rail-related jobs typically earn above-market wages, are often sourced locally, and do not require advanced college degrees. 

For these reasons, it is clear why economic developer organizations (EDOs) are all aboard the rail train. But how can a company seeking a rail-served site lay down the track for successful site selection? 

Timeliness is essential 
Meeting project timelines is essential for site selection in any industry. The difference between being able to break ground in 6 months versus 18 months could be the difference between a project’s success or its failure—and especially for rail projects. Historically, freight has been a point to point business with long haul truck lanes. Now, there’s a freight advantage to put that long-haul container- 53 foot domestic- on a train to move through certain lanes. 

No wonder one of the biggest factors disrupting rail-served site selection at present is the lack of shovel-ready sites, or sites that are ready to go and equipped with road, water, sewage and special permits. So, one key to successful site selection is being able to identify EDOs that can offer shovel-ready sites that match your geographic needs and align with your project timelines. 

Rural providing opportunity 
It’s common to seek rail-served industrial properties and intermodal logistics centers around the major urban areas. The EDOs for urban-centric locations typically have greater access to capital than more remote areas to market their sites. 

However, the biggest opportunity for a company seeking a rail-served location is to choose the cornfields over bright city lights. That is, in an economy with incredibly low unemployment, rural markets tend to have a greater availability of solid workers whose skills are perfectly aligned with the type of jobs that rail-served industrial projects provide: positions with above-market wages that do not require advanced college degrees. 

The catch is that rural communities rarely have the capital to gain publicity and awareness for their rail-served sites. So, it helps for your project team to include someone who has some knowledge of EDOs and railroad routes across the country. What you want is a rural location that is geographically linked to important ports, cities and transportation centers that may also offer streams of labor. 

What’s next? 
Railroads have been the main deliverers of goods, services, and most important, economic activity and vitality in America for the past 150 years. And, railroad usage isn’t slowing down anytime soon. If anything, the need for shovel-ready, rail-served sites and sustainable workforces is only becoming more urgent. If you’re a user of rail-served locations, start laying your tracks early and look outside the urban centers—and you may find a faster track to a new site. 

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About the Author
Laurence Kahn, Senior Director, Industrial, Franklin Street
As Senior Director in Franklin Street’s Orlando office, Larry Kahn specializes in industrial real estate services for clients in Florida. He is a 20-year Industrial real estate veteran who has extensive experience consulting domestic and international parties on issues regarding supply chain, logistics, rail, operations and restructuring. Franklin Street, a full-service commercial real estate firm, was established in 2006 and serves clients around the Southeast from its offices in Tampa, Orlando, Jacksonville, Fort Lauderdale, Miami and Atlanta. Most recently, Mr. Kahn served as a Director and National Leader for Cushman & Wakefield’s Rail Advisory Group, where he specialized on rail-served industrial real estate. He focused in site selection and bringing rail-served properties to market throughout the United States and Canada. Prior to Cushman & Wakefield, he worked as Vice President at CNL Commercial Real Estate.

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