Friday, July 10, 2015

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Big logistics cluster project takes shape in Oakland

By Peter Hurme

It’s a rare occurrence when a decent chunk of coastal land is available to enhance and expand cargo operations at U.S. shipping gateways.

On the U.S. West Coast, extra land for multimodal operations with any type of on-or-near-dock deep water, intermodal rail access and warehousing capacity is a special rarity, not to mention competing civic and community visions that can be at odds with any industrial waterfront environment.

In Oakland, Calif., the exception to the rule appears to be taking shape with the Oakland Global Trade and Logistics Center ─ a "logistics cluster" that will inhabit approximately 360 acres when fully developed.

The public-private project, with an estimated cost of $1.2 billion, grew out of what had been the former Oakland Army Base that closed in 1993. It was ultimately transferred to the City of Oakland and Port of Oakland – each with their own share of the property that both are investing in heavily.

Joining forces with the city and port in the enterprise is the development team, Oakland-based master developer California Capital Investment Group, and global industrial real estate giant Prologis, which are in a joint venture leasehold for 66 years. The project has also received considerable funding from the state of California and the Federal government.

The Oakland Global development commenced construction in October 2013 and will include: a $100 million intermodal rail yard with 16 parallel tracks that stretch 4,000 feet with projected capacity for 200,000 containers; a $250 million 34-acre bulk shipping terminal capable of handling more than seven million metric tons of commodities; approximately one million square feet of new warehouse space and other planned improvements, such as 30 acres of truck parking and support services.

"We want to get the region’s cargo in and out in the most efficient manner possible," said Phil Tagami, chief executive of CCIG, who recently sat down to discuss the project at the onsite headquarters.

"The rail is a critical element – the project is designed around rail," he said. "Every containership that calls creates over 30 miles of truck traffic, end to end. Rail is a good solution to alleviate that congestion."

Tagami’s team initially competed against 13 other bidders ─ who had what he described as "a range of ideas not industrial-related" ─ for how to develop the former Army base, including one plan to build a casino.

"We took our real estate best practices and applied [them] to transportation – we’re a customer service company. We’re not here to tell the customer what to do but to listen to them and what they want," Tagami said. "We looked at the West Coast and found ancillary maritime services are critical ─ such as having chassis repair and cross-dock warehousing."

The inspiration of the "logistics cluster" concept was, according to Tagami, derived in part from MIT Professor Yossi Sheffi who wrote a book on the concept, where cargo customers locate their distribution businesses in a geographic area that in turns drives more logistics-related businesses and infrastructure to cluster together.

"Our role is to attract BCOs (Beneficial Cargo Owners) to Oakland," Tagami said. In the meantime, the Oakland Global project is reportedly creating thousands of new local jobs in a city that took an economic hit when its Army base closed, and is, according to Tagami, scheduled for completion in early 2019, with revenue generation projected by the third quarter of 2016.

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