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Case Study

Locating savings for a major distribution network

Jones Lang LaSalle was engaged by a $4 billion retailer to identify a regional distribution location to support future store expansion into the southeastern U.S.  Our Supply Chain & Logistics Solutions team worked closely with the company to analyze multiple scenarios to determine an optimal cost solution that maintained current service levels to retail stores.   We compared cost differentials including transportation, workforce, real estate, taxes and incentives between rural build-to-suit locations and established existing distribution locations, as well as project risks associated with lease versus own, and self- versus turnkey development. Our team also created a state and local incentives strategy to address income and port tax credits for multi-state options.

On our recommendation, the retailer selected East Point, Georgia, in metropolitan Atlanta, as its new Southeastern Regional Distribution Center site. Despite incrementally higher real estate and labor costs, the region provided a more stable workforce and a net transportation savings of more than $10 million. Being able to reduce overall occupancy cost while increasing tenant improvement capitalization and flexibility for expansion and/or termination will save an additional estimated $7 million.

Our Project and Development Services team managed the tenant improvement design and procurement process, saving an estimated $1.2 million; 17 percent of the development budget. Finally, our Business and Economic Incentives team negotiated additional local and state tax credits worth more than $1 million. The end result: a distribution center that supports retail growth, yet provides plenty of real saving to the budget.

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