UPS is seeking tax incentives to create a regional shipping hub with up to 1,400 jobs in an industrial warehouse district in southeast Arlington.
Under the deal, which will go before the City Council on Tuesday, United Parcel Service would make a $105 million investment and the city would refund 85 percent of taxes assessed against business personal property for seven years.
Bruce Payne, the city’s economic development manager, called the deal “a major get” for the city. He said the project has been in the works for several months and required besting competition.
“You don’t get a lot of million-square-foot deals coming through with that many employees and investment,” Payne said. “We’re very fortunate.”
UPS would lease a warehouse of 1 million square feet that is nearing completion in the Arlington Commerce Center, an industrial complex of several large facilities south of Interstate 20, in the southeast corner of New York Avenue and Bardin Road.
UPS plans to almost immediately expand the building by 200,000 square feet, Payne said, adding that 1.2 million square feet covers the area of 25 football fields.
He said the hub would probably be operating in a year but that it would take perhaps a few years for the workforce to reach 1,400 employees. “They’ll ramp it up over time,” Payne said.
UPS is one of the great companies in America, and we are very excited to have them coming here to Arlington.
Arlington Mayor Jeff Williams
UPS needs the new hub location “due to e-commerce volume growth, particularly around the holiday seasons,” according to a city staff report.
The report also said the UPS hub is required to reach “a minimum added taxable value of $30 million the first year, $40 million the second year” and then a sustainable $50 million value in the third and remaining years of the seven-year agreement.
The contract requires UPS to create 500 full-time and 600 part-time jobs for a total of 800 full-time equivalent positions by Dec. 31, 2019, according to the report. “However, UPS anticipates creating up to 1,400 full-time equivalent positions at this location, which will be all new jobs to Arlington.”
A spokeswoman at UPS headquarters in Atlanta had no specific comment on the project.
“We’re making investments and capital improvements around the globe,” said UPS public relations director Susan Rosenberg. “But there’s nothing specific to announce in Arlington.”
She said the Fortune 500 company has several hubs and other processing and shipping operations in the Dallas-Fort Worth area, including an air hub at DFW Airport and its largest local hub in Mesquite.
“There’s a large UPS footprint in the Metroplex,” Rosenberg said.
Worldwide, UPS has 434,000 employees and ships upward of 19.1 million packages a day.
“UPS is one of the great companies in America, and we are very excited to have them coming here to Arlington,” Mayor Jeff Williams said Saturday. “UPS really valued our location at 360 and I-20.”
Payne said the Arlington facility would not consolidate other facilities. “This will be a major center for UPS for receiving and distributing packages,” he said.
Exeter Property Group, which owns Arlington Commerce Center, which is part of the Great Southwest Industrial District, had no comment on the UPS deal, said Barney Sinclair, a principal in Exeter’s southwest regional office.
But he discussed the construction project. He said work on Building E — the largest and latest of the five-building complex — started in August “and we’re completing the building right now.” That building, which the city says UPS would lease, comprises the lion’s share of space in the complex, which will total 2.9 million square feet.
Exeter has its own Chapter 380 agreement with the city, allowing for tax refunds of up to $650,000 because of the special difficulty developing the Building E site, particularly the relocation of a creek, Sinclair said.
The city’s contract with UPS reduces the company’s tax refund by $92,857 annually over the seven-year period to account for that $650,000 tax benefit to Exeter, according to the city staff report, which estimated a first-year net tax savings of $71,567 for UPS. Future years’ savings will depend on the Tarrant Appraisal District’s depreciation schedule, the report said.
Payne said demand for industrial space is strong in Arlington, which has 40 million square feet of warehousing. He said the vacancy rate was tight at just 4.5 percent until recently, when new construction caused the rate to grow to 6.5 percent.
Williams Sonoma, a specialty retailer of home furnishings and gourmet cookware, moved into an 800,000-square-foot warehouse in Exeter’s complex in 2014.
Mayor Williams noted another big-name addition to the I-20 corridor, Summit Racing Equipment, a leading seller of performance auto parts and accessories, is building a 700,000-square-foot store and distribution center next to the American Commerce Center that will employ at least 250 workers.